CELEX: 62003CC0467
Language: en
Date: 2005-01-20 00:00:00
Title: Opinion of Advocate General Kokott delivered on 20 January 2005. # Ikegami Electronics (Europe) GmbH v Oberfinanzdirektion Nürnberg. # Reference for a preliminary ruling: Finanzgericht München - Germany. # Common Customs Tariff - Tariff headings - Tariff classification of a digital recording machine - Classification under the Combined Nomenclature. # Case C-467/03.

OPINION OF ADVOCATE GENERALKOKOTTdelivered on 20 January 2005(1)
         Case C-467/03Ikegami Electronics (Europe) GmbHvOberfinanzdirektion Nürnberg(Reference for a preliminary ruling from the Finanzgericht Munich (Germany))
            (Common Customs Tariff  –  Tariff headings  –  Classification in the Combined Nomenclature of digital recording apparatus developed for video monitoring purposes  –  Note 5(E) to Chapter 84 of the Combined Nomenclature)
            
      
         
      I –  ntroduction
        1.        By means of a reference for a preliminary ruling the Finanzgericht München (Finance Court, Munich) has submitted a question
      to the Court as to how a computer-based video monitoring system should be classified in the Combined Nomenclature (CN). The
      apparatus at issue stores for video monitoring purposes signals from several video cameras compressed as data on hard disks
      and which may be reproduced on monitors.
      
      
        2.        The plaintiff in the main proceedings, Ikegami Electronics (Europe) GmbH (hereinafter: ‘Ikegami’), takes the view that the
      digital recording apparatus should be classified on account of the data-processing characteristics of its components and of
      its mode of operation as an ‘automatic data-processing machine’ under CN subheading 8471 50 90. The defendant in the main
      proceedings, the Oberfinanzdirektion Nürnberg (Principal Revenue Office, Nuremberg), on the other hand, takes the view that
      according to Note 5(E) to Chapter 84 of the CN account must be taken of the function of the machine as a whole and that therefore
      the apparatus should be classified as ‘video recording or reproducing apparatus’ under CN subheading 8521 90 00.
      
      
        3.        The Finanzgericht Munich, uncertain as to the correct interpretation of Note 5(E) to Chapter 84 of the CN, wishes to know
      from the Court whether that note is to be interpreted as meaning that video monitoring apparatus which stores signals from
      several video cameras compressed on hard disks for reproduction on monitors performs a function other than that of data processing.
      
      
      
      II –  Legal framework
        4.        The version of the Combined Nomenclature – first provided for in 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 
         			(2)
         		 – in force at the time the events at issue in the main proceedings occurred is provided for in Annex I to Commission Regulation
      (EC) No 2031/2001 of 6 August 2001. 
         			(3)
         		
      
        5.        The second part of that Annex includes a Section XVI entitled: ‘Machinery and mechanical appliances; electrical equipment;
      parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories
      of such articles.’
      
      
        6.        That section contains two chapters, Chapter 84 entitled: ‘Nuclear reactors, boilers, machinery and mechanical appliances;
      parts thereof’ and Chapter 85 entitled: ‘Electrical machinery and equipment and parts thereof; sound recorders and reproducers,
      television image and sound recorders and reproducers, and parts and accessories of such articles.’
      
      
        7.        Chapter 84 includes heading 8471, ‘Automatic data-processing machines and units thereof; magnetic or optical readers, machines
      for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included.’
      
      
        8.        Subheading 8471 50 concerns ‘digital processing units other than those of subheading 8471 41 or 8471 49, whether or not containing
      in the same housing one or two of the following types of unit: storage units, input units, output units.’ Subheading 8471
      50 90 relates to those goods which are not intended for use in civil aircraft. Regulation No 2031/2001 exempts those goods
      from conventional duties.
      
      
        9.        Chapter 85 includes the heading 8521, ‘Video recording or reproducing apparatus, whether or not incorporating a video tuner.’ Subheading 8521 90
      00 relates to those apparatus without magnetic tape. Under Regulation No 2031/2001, the conventional rate of duty on those
      goods is fixed at 14%.
      
      
        10.      Notes 3 to 5 to Section XVI provide:
      ‘3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a
      whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to
      be classified as if consisting only of that component or as being that machine which performs the principal function.
       4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected
      by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined
      function covered by one of the headings in Chapter 84 or 85, then the whole falls to be classified in the heading appropriate
      to that function.
       5. For the purposes of these notes, the expression “machine” means any machine, machinery, plant, equipment, apparatus or
      appliance cited in the headings of Chapter 84 or 85.’
      
      
        11.      Note 5 to Chapter 84 of the CN provides inter alia the following explanations:
      
      ‘(A)
         For the purposes of heading 8471, the expression ‘automatic data-processing machines’ means:
      
      (a)        digital machines, capable of
      
      (1)
         storing the processing program or programs and at least the data immediately necessary for the execution of the program;
      
      
      (2)
         being freely programmed in accordance with the requirements of the user;
      
      
      (3)
         performing arithmetical computations specified by the user; and
      
      
      (4)
         executing, without human intervention, a processing program which requires them to modify their execution, by logical decision
            during the processing run;
         
      
      ...
      
      (E)
         Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic
            data-processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in
            residual headings.’
         
      
      
      
      III –  Facts and main proceedings
        12.      On 6 December 2001 Ikegami applied to the Zolltechnische Prüfungs- und Lehranstalt (Customs Laboratory and Training College)
      in Munich for a binding tariff information concerning apparatus designated as a ‘Digital Recorder SDR G 8000 8.’
      
      
        13.      In addition to a keyboard and a built-in glide mouse, the apparatus has a video digitizer board for four video cards with
      connector ports for up to eight television cameras, image movement control, a main board with a processor and three hard disk
      slots, a video storage device, sound, LAN, graphics and modem cards, a hard disk, and a CDRW drive in the same housing. The
      Windows ME operating system, software for the digital recorder, and the software for the CDRW drive are pre-installed on the
      hard disk.
      
      
        14.      Whereas Ikegami requested that the apparatus be classified as an ‘automatic data-processing machine’ under CN subheading 8471 50 90,
      by Binding Customs Tariff Information No DE M/119/02-1 of 14 January 2002 the Zolltechnische Prüfungs- und Lehranstalt in
      Munich classified it as ‘video recording or reproducing apparatus’ under CN subheading 8521 90 00.
      
      
        15.      Following an unsuccessful challenge to the classification Ikegami brought an action before the Finanzgericht München contesting
      the binding customs tariff information. In that action it argued that the apparatus in question must be regarded as a data-processing
      machine on account of its individual components and its mode of operation, both of which are exclusively concerned with data
      processing. Taken individually, all the components of the apparatus must be classified under CN heading 8471 and not a single
      one under CN heading 8521, and in addition to the pre-installed functional user software it is possible at any time to install
      other user programs so that the apparatus can be used in the same way as a completely ordinary PC. Furthermore, for Note 5(E)
      to Chapter 84 of the CN to be applicable at least two functions must be present, that is to say a data-processing one and
      one other; such a characteristic is lacking in the present case, however, since the apparatus is only for data processing.
      
      
        16.      The Oberfinanzdirektion Nürnberg applied for the action to be dismissed. It argued that having regard to Note 5(E) to Chapter
      84 of the CN, a machine which operates with the aid of a computer should not be classified according to the function of the
      individual components, but according to the actual function of the machine as a whole. On account of its special equipment
      the apparatus in this case possesses the sole function of digital recording and reproduction of images and sound for video
      monitoring purposes, so that it must be classified under CN heading 8521.
      
      
        17.      In its order seeking a preliminary ruling the Finanzgericht München observes that whilst the apparatus at issue satisfies
      the requirements of an ‘automatic data-processing machine’ within the meaning of Note 5(A)(a) to Chapter 84 of the CN and
      can be used as a common ordinary personal computer, it is on account of its special equipment designated, treated and used
      as a digital video recorder. The data processing serves exclusively the purpose of recording and reproducing video signals
      and the hardware and software equipment of the apparatus are configured solely for that purpose. In the absence of other software
      no use other than that as a video recorder is intended. In the view of the Finanzgericht München, therefore, the apparatus
      has a video recording function as referred to by CN heading 8521 and which, in accordance with the case-law, can constitute
      a function other than data processing within the meaning of Note 5(E) to Chapter 84.
      
      
      IV –  Reference for a preliminary ruling and procedure before the Court
        18.      By order of 24 June 2003 the Finanzgericht München therefore stayed the proceedings and submitted a reference to the Court
      for a preliminary ruling on the following question:
      ‘Is Note 5(E) of the Combined Nomenclature, in the version of Annex I to Regulation (EC) No 2031/2001 amending Annex I to
      Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 2001 L
      279, p. 1), to be interpreted as meaning that video monitoring apparatus which stores signals from several video cameras compressed
      on hard disks for reproduction on monitors performs a function other than that of data processing?’
      
      
        19.      The reference for a preliminary ruling was lodged at the Court Registry on 6 November 2003. Under Article 23(2) of the Statute
      of the Court, Ikegami and the Commission of the European Communities submitted written observations.
      
      
      V –  Observations of the parties
       A – Observations of Ikegami
        20.      Ikegami emphasises that in the present case the Court – unlike in its previous judgments on the matter 
         			(4)
         		 – does not have to decide on the tariff classification of individual elements of a data-processing machine but on that of
      a complete personal computer equipped with several additional components. 
      
      
        21.      According to the Court’s case-law 
         			(5)
         		 the decisive criteria for tariff classification of apparatus are its objective characteristics and properties as set out
      in the terms of the headings of the CN and the Common Customs Tariff and in the provisions concerning their sections and chapters,
      but under no circumstances variable characteristics. In any event, in Ikegami’s view, the possible uses for an apparatus cannot
      be decisive when classifying it for tariff purposes since, contrary to case-law and to the requirement of legal certainty,
      that would permit purely subjective criteria to be taken into account. The only objective characteristic referred to by Note
      5 to Chapter 84 of the CN is that of data processing and thus that characteristic alone is decisive, as is similarly any function
      independent of data processing for the purposes of distinguishing that characteristic from the former. Such a function ‘other
      than’ data processing must be a different technical process such as may be found, for example, in a welding machine which
      is merely computer controlled, not however in a machine which performs nothing other than data processing.
      
      
        22.      Since no single element of the apparatus in question is capable of performing its data-processing function without a data-processing
      machine so as to be classified individually in accordance with Note 5(E) to Chapter 84 of the CN on the basis of its own functions,
      it must be considered in those circumstances whether the entirety constituted by those elements performs a function additional
      to that of data processing. According to Ikegami, however, that is not the case: whilst the combination of the elements permits
      more technically complex functions, even those more complex functions do not go beyond that of data processing and neither
      through its individual components nor as a whole can the apparatus perform functions other than that of data processing.
      
      
        23.      Having regard to paragraphs 83.0 and 83.5 of the Explanatory Notes to the Harmonised System (HS) concerning Note 4 to Section
      XVI in the version in force when compiling its observations, Ikegami argues that the apparatus in question has no such other
      function and that it should be separately classified for tariff purposes even though when it is combined with television cameras
      it is capable of constituting an element of a monitoring system. In that regard Ikegami indicates that the apparatus in question
      does not permit the parallel recording of images and sound.
      
      
        24.      For those reasons Ikegami proposes that the Court answer the question referred for a preliminary ruling as follows:
      ‘Note 5(E) of the Combined Nomenclature in the version of Annex I to Regulation (EC) No 2031/2001 amending Annex I to Council
      Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 2001 L 279, p. 1)
      is not to be interpreted as meaning that video monitoring apparatus which stores signals from several video cameras compressed
      on hard disks for reproduction on monitors performs a function other than that of data processing.’
      
      
       B – Observations of the Commission
        25.      The Commission refers firstly to the information concerning heading 8521 in the Explanatory Notes to the Harmonised System,
      third edition (2002), as amended in accordance with the decisions adopted by the Harmonised System Committee at its 32nd session
      (November 2003).
      
      
        26.      According to Rule 1 of the General rules for the interpretation of the CN (hereinafter: ‘the general rules’) classification
      is to be determined according to the terms of the headings and any relative section or chapter notes. It thus follows that
      classification must be determined initially according to the terms of the headings, and then according to the relative section
      or chapter notes, before the remaining general rules may be taken into account. In so doing, in accordance with Rule 3(a)
      of the general rules it must be ensured that the heading which provides the most specific description is preferred to headings
      providing a more general description.
      
      
        27.      In the Commission’s view the decisive characteristic for classification purposes in the present case is the expression ‘function’,
      which must be understood in a teleological sense and which refers to the purpose or use of an article. Thus in the absence
      of a definition for an article, its purpose can be treated as one of its objective characteristics. In those circumstances
      it is of no regard that that ‘other function’ of video recording and reproduction is achieved by means of data processing
      since in any event that constitutes a separate function which can be achieved without data processing, albeit ‘more laboriously’.
      Since the very purpose or function of the apparatus in question can be found under CN heading 8521, which is a more specific
      description of the function or purpose than that available under CN heading 8471, any reference to Note 5(E) to Chapter 84
      of the CN is superfluous.
      
      
        28.      According to the Commission, its analysis is supported by the judgment of the Court of First Instance in Sony Computer Entertainment Europe, in which it held that the mere fact that an apparatus fulfils the conditions of Note 5(A) to Chapter 84 and does not perform
      any specific function other than data processing for the purposes of Note 5(E) to that chapter does not by itself preclude
      such an apparatus from being classified under another heading. 
         			(6)
         		 Furthermore, the argument advanced by the plaintiff renders several of the tariff headings in Chapters 85 and 90 redundant,
      since even at the present time as a result of technical advances the only function performed by most of the apparatus listed
      in those chapters is that of data processing in the broader sense; thus only certain apparatus based on wholly outdated technology
      could still be classified under those headings.
      
      
        29.      For those reasons the Commission proposes that the Court answer the question referred for a preliminary ruling as follows:
      ‘In order to classify an article for tariff purposes, even before the notes to the sections and chapters (including in the
      present case Note 5(E) to Chapter 84 of the CN) are examined it is necessary to consider at the outset the terms of the headings
      and the general rules on the interpretation of the Combined Nomenclature. In accordance with both Rule 1 and Rule 3(a) of
      the General rules on the interpretation of the Combined Nomenclature, classification must be determined according to the terms
      of the headings, with the heading which provides the most specific description being preferred to headings providing a more
      general description. Where the function or purpose of an article is contained within the terms of a heading, then that heading
      is more specific than another heading whose terms provide a more general description of the article or its function. In the
      light of these conclusions it is for the national court to determine whether the terms of CN heading 8521 provide a more specific
      description of the article in question than those of heading 8471.’
      
      
      VI –  Legal appraisal
        30.      In order to classify the apparatus in question within the Combined Nomenclature the national court essentially wishes to know
      how Note 5(E) to Chapter 84 is to be interpreted. The Commission correctly observes, however, that classification does not
      depend solely on that note: the terms of the headings and other notes must also be taken into account. I will therefore set
      out below first the legal test for determining classification and then guidance as to how it is to be applied to the present
      case. In so doing I will propose an answer to the question referred. 
      
      
       A – Legal tests and provisions 
        31.      The Combined Nomenclature is based upon the ‘Harmonised System’ concluded as an international agreement within the framework
      of the World Customs Organisation. Since the Community is a party to that agreement it is bound by its provisions. Under Article
      300(7) EC, international law obligations of the Community enjoy an ‘intermediate status’, that is to say, they take effect
      subject to primary law, but take precedence over Community secondary law. Community secondary law, including the Combined
      Nomenclature which is based upon a regulation, must therefore be interpreted in line with the requirements of the Harmonised
      System.
      
      
        32.      The Harmonised System is a multi-functional nomenclature which is constructed so as to be able to take all internationally
      traded goods into account. The Combined Nomenclature has adopted the structure of the Harmonised System but contains further
      subdivisions for Community tariff and statistical purposes. The general rules, sections and their notes, chapters and their
      notes, headings and the first subheadings up to the sixth digit of the 11-digit code number of the customs tariff are based
      upon the Harmonised System. 
         			(7)
         		 Subsequent subdivisions are based solely upon Community secondary law.
      
      
        33.     Rule 1 of the general rules contains the basic rule for performing every classification in the Combined Nomenclature. It provides
      that classification shall be performed first and foremost according to the terms of the headings and the notes to the sections
      and chapters. The terms of the headings and the notes carry equal weight for that purpose. The terms of the heading provide
      as it were the core concept, which is supplemented and clarified by the notes to the sections and chapters. Only to the extent
      that those provisions do not otherwise so require may in a subsidiary manner the subsequent general rules 2 to 5 be applied. Consequently, before recourse may be had to general rules 2 to 5 it must be determined whether the article in
      question is described by the terms of a heading or whether a note contains special instructions for its classification. In
      contrast thereto the titles of sections, chapters and sub-chapters are provided for ease of reference only and may be relied
      upon only as an aid. The same is true for explanatory notes and classification opinions on the Harmonised System and on the
      Combined Nomenclature which similarly do not have binding force, but which constitute merely additional sources, albeit often
      important, in particular when interpreting the terms of headings. 
      
      
        34.      Rule 1 relates however only to headings and as such is only applicable to the first four digits of the code number. In respect of further subdivisions arising from
      subheadings,Rule 6 applies: essentially it provides for a process of classification analogous to that undertaken under the headings. It becomes
      thereby apparent that the Combined Nomenclature is constructed in a strictly hierarchical manner and that classification must
      proceed step by step from the general to the particular taking each level in turn, starting with the heading, then the subheading
      of the Harmonised System and finally the subheading of the Combined Nomenclature.
      
      
        35.      The two relevant criteria for classification of an article are its material composition and its intended use. The intended
      use of an article is to be determined by recourse to objective criteria.
      
      
        36.      In classifying an article in the Combined Nomenclature the following steps must therefore be taken: (1) the intended use and
      material composition of the article must be precisely determined; (2) in the light of the wording of the headings of the relevant
      sections and chapters a provisional classification must be undertaken (a) according to its intended use and (b) according
      to its material composition; (3) it must then be considered whether on a combined examination of the wording of the headings
      and the explanatory notes to the relevant sections and chapters a definitive classification may be reached; if that is not
      possible then (4) in order to resolve the conflict between the competing provisions recourse must be had to Rules 2 to 5 of
      the general rules (in the present case in particular Rule 3); (5) lastly, classification must be made under (a) a subheading
      of the Harmonised System and (b) a subheading of the Combined Nomenclature. For the purposes of the question referred the
      third step is particularly significant.
      
      
       B – Application to the present case
        37.      In the light of this test and the known facts the national court should examine therefore the following points.
      
      
       1. Determining the article’s characteristics
      
        38.      The apparatus at issue is a combination of individual components which are connected with one another by wires, transmission
      devices, electrical cables or other devices and which are intended to work together, forming a whole. It consists mainly of
      standard components for personal computers but in addition it has several components which are specially designed for the
      processing of video data.
      
      
        39.      Under the standard components for personal computers the following may be mentioned: the main board (Asus CUV4x-E) with a
      standard processor (Intel Pentium III with a frequency of 866 Megahertz), the standard main memory (128 Megabyte), a hard
      disk and three hard disk slots, a graphics card (for connecting standard monitors), a sound card, a network card, a modem
      card, a CDRW drive, a keyboard and a built-in glide mouse. The Windows ME operating system and the software for the CDRW drive
      are pre-installed on the hard disk, which is a standard feature of personal computers. As the national court concludes, the
      apparatus at issue thus possesses all the components which permit it to be used as a normal everyday personal computer.
      
      
        40.      The following features can be categorised as distinctive for the processing of video data: the video digitizer board for four
      video cards with connector ports for up to eight television cameras, the image movement control and the software for the digital
      recorder. Each of these items also constitutes a component or software for personal computers.
      
      
        41.      As regards the operation of the apparatus, it is indisputable that both the individual components and also the apparatus as
      a whole perform exclusively data-processing tasks. It is no different as regards the particular processing of video data:
      the video cards first convert the incoming analogue data from television cameras into digital data and transmit them to the
      video digitizer board which coordinates the data from the different video cards. The video digitizer board then forwards the
      coordinated data to the main circuit board which ensures that it is saved in a highly compressed form on the hard disk. From
      there the data can be displayed on monitors, transferred or processed. The features present do not permit the apparatus, however,
      simultaneously to record images and sound or to record ‘moving images’, but only to record ‘snapshots’ at a frequency of 2
      to 15 images per second. 
         			(8)
         		
      
        42.      In addition to its use as a stand-alone system the apparatus is designed for use in a network, permitting the installation
      of hundreds of cameras and allowing up to 32 users simultaneously to view both live and recorded images across the network.
      In so doing the apparatus may function as a ‘client’, permitting images to be displayed which are stored not within the apparatus
      itself but elsewhere in the network. Furthermore the apparatus includes the feature of an image movement detector which on
      detecting movement in an image can increase image quality and recording frequency, can display a warning and can even automatically
      send warnings to mobile phones and similar apparatus. Finally the image movement control of the apparatus permits the enlargement
      and reduction of image sections and, where necessary, the panning of the relevant cameras. 
         			(9)
         		
      
        43.      On account of its special features for recording image data without sound data the apparatus is designed for use as an element
      within a video monitoring system. Both the objective characteristics of the apparatus and the product description 
         			(10)
         		 according to which it is marketed support this view. An alternative or additional use is possible at any time: however, in
      certain cases this requires further software. In addition to storing encoded, compressed video data on hard disks and the
      display thereof on monitors the apparatus on account of its characteristics directly or easily permits the following to be
      performed: use of the standard functions of a personal computer equipped with Windows ME, copying of data or its transfer
      to CDs, sending data across a network and processing and conversion of (image) data into other formats. It is therefore easily
      possible, for example, at the same time as images are being recorded to keep a log by means of word processing or spreadsheet
      calculations of persons entering or leaving a building.
      
      
        44.      Thus the primary intended use of the apparatus is as an element of a video monitoring system. It can be used in that function
      to control the camera system, to make space-saving recordings, to save, forward, display and transfer single image data and
      to analyse the image data in order to issue warnings and to detect responses thereto; additionally it enables further functions
      to be utilised for monitoring purposes, such as the keeping of (visitor) logs. As for the material composition of the apparatus
      it is that of a classical data-processing machine with additional features for processing image data.
      
      
       2. Wording of the headings
      (a) Provisional classification according to its intended use
      
        45.      If one focuses on the intended use of the apparatus at issue then at first both CN heading 8521 ‘Video recording or reproducing
      apparatus ...’ and CN heading 8471 ‘Automatic data-processing machines ... machines for transcribing data onto data media
      in coded form and machines for processing such data ...’ call to be considered since the apparatus is intended firstly for
      the transcription of images as data onto data media in coded form and in addition permits such data to be processed.
      
      
        46.      However, CN heading 8521 concerns ‘video recording or reproducing’ apparatus and in so far as it can be discerned inter alia
      from the Explanatory Notes to the Harmonised System 
         			(11)
         		 and to the Combined Nomenclature 
         			(12)
         		 this means that an apparatus for recording and reproducing must be capable of recording and reproducing simultaneously images
      and sound. Furthermore the expression ‘video apparatus’ suggests that it must at least also be possible to record moving images.
      That would require a recording and reproducing frequency of around 23 to 25 frames per second, as in cinemas is also usually
      the case (24 frames per second).
      
      
        47.      In the present case the characteristics of the apparatus with its single sound card do not permit the simultaneous recording of sound alongside the images from up to eight video cameras, which tends to preclude its classification as a video recorder
      under heading 8521. However, according to the facts available, the possibility cannot be excluded that images and sound may
      at least be simultaneously reproduced, which could permit classification as reproducing apparatus under CN heading 8521. Nevertheless doubts persist as to the
      aptness of this heading since the apparatus is not in fact intended to be a mere reproduction device but can record, process
      and reproduce. Those doubts are reinforced by the fact that the maximum image frequency of 15 frames per second, which in
      addition should only be achieved in exceptional cases, does not permit moving images to be shown. As a consequence we are
      not concerned with what would be normally described as video recordings but only with the recordings of snapshots. Finally,
      the functionality of the apparatus is not limited to the recording of images but also it analyses the image data, for example
      as regards changes in the picture frame, in order to be able to raise an alarm, and it permits the operation of the monitoring
      system cameras to be controlled. This goes considerably beyond the functions of ‘video recording or reproducing apparatus.’
      Having regard to the intended use of the apparatus and its functionality in recording and reproducing images CN heading 8521
      should not, however, be excluded from the outset. 
      
      
        48.      An intended use which falls within the meaning of CN heading 8471 is nevertheless also possible, since the apparatus is intended
      to transcribe image data onto data media in coded form and simultaneously permits the further processing of such data.
      (b) Provisional classification according to its material composition
      
      
        49.      In the light of its components and mode of operation the material composition of the apparatus permits consideration only
      of CN heading 8471: ‘Automatic data-processing machines ... machines for transcribing data onto data media in coded form and
      machines for processing such data ...’.
      
      
       3. Wording of the headings and explanatory notes
      
        50.      As regards the two possible CN headings 8471 and 8521, Note 3 to Section XVI and Notes 5(A) and (E) to Chapter 84 of the CN
      are relevant to the present case. On the other hand Note 4 to Section XVI is not applicable, since whilst the apparatus at
      issue is a combination of interconnected individual components an unambiguous, clearly defined function which is covered by
      one of the headings in Chapter 84 or 85 of the CN is not to be discerned from its intended use, which calls for two headings
      to be considered.
      
      
        51.      Under Note 3 to Section XVI, the apparatus as a composite machine should be classified according to the principal function
      of the machine as a whole. In this case that would be its use as an element in a video monitoring system for recording and
      analysing soundless single image data and for controlling the system’s operation. This suggests classification under CN heading
      8471.
      
      
        52.      Under Note 5(A) to Chapter 84 of the CN, the apparatus should also be classified under CN heading 8471 since as a digital
      machine it is capable of storing the processing programs and the data necessary for the execution of the programs, of being
      freely programmed in accordance with the requirements of the user, of performing arithmetical computations specified by the
      user, and of executing, without human intervention, a processing program which requires it to modify its execution, by logical
      decision during the processing run.
      
      
        53.      As the national court correctly observes, a different conclusion could be reached on application of Note 5(E) to Chapter 84
      of the CN, however if the apparatus in fact performs a specific function other than data processing and merely incorporates
      or works in conjunction with an automatic data-processing machine in order to achieve that purpose. 
      
      
        54.      Ikegami takes the view that the expression ‘other function’ within the meaning of Note 5(E) to Chapter 84 of the CN must relate
      to a technical process other than that of data processing, as is the case, for example, in a welding machine which is merely
      controlled by a computer, but not in the case of a machine which performs nothing but data processing. In contrast, the Commission
      and the national court take the view that the ‘other function’ can be achieved by means of data processing since in any event
      it concerns a separate function which can also be achieved without data processing.
      
      
        55.      In line with the Commission’s view and that of the national court it must be assumed that the ‘other function’ in Note 5(E)
      to Chapter 84 of the CN can also be achieved by means of data processing, as the following arguments demonstrate. There cannot
      be any doubt that, for example, a classical video recorder of the magnetic-tape type (‘VCR’) operating principally under the
      VHS system should be classified under CN heading 8521. In more recent times that ageing technology is increasingly being replaced
      by digital DVD recorders which digitally process images and sound by means of an integrated data-processing machine and store
      them as data bundles either directly on DVDs or initially on integrated hard disks from which they can then be played back
      or transferred to DVD. All the functions of such apparatus are configured for the recording and reproducing of image and sound
      data and the incorporation of a data-processing machine merely permits that to be achieved digitally, as was also previously
      possible on an analogue basis with a classical video recorder, even if in a poorer quality. The integral data-processing machine
      is specifically configured for the other purpose of the apparatus and cannot be put to an alternative use. In particular it
      is not usually possible to programme it freely. Since on that basis alone the requirements of Note 5(A) to Chapter 84 of the
      CN are not satisfied, the classification of such a DVD recorder under CN heading 8471 despite the ‘innards’ of the apparatus
      performing exclusively data-processing tasks would be incorrect. The correct heading in that case would be CN heading 8521. 
         			(13)
         		
      
        56.      The position appears to be different, however, as regards the apparatus at issue in this case. First, having regard to its
      components it is essentially a personal computer with additional features for video processing, the latter also consisting
      of data-processing components taken from the field of personal computing. In particular, unlike a standard DVD recorder it
      satisfies thereby all the requirements of Note 5(A) to Chapter 84 of the CN. Secondly, according to the available information
      it does not in fact fulfil the classic function of a video recorder, that is, the recording and reproduction of sound and
      images simultaneously, but is configured specifically for use in a video monitoring system which imposes other requirements.
      Thirdly, in so far as it can be ascertained, its use is after all not limited to the function of recording and displaying
      image data, but it additionally analyses that data for monitoring purposes and permits the operation of the monitoring system
      to be controlled. These are data-processing functions which go beyond the function description under CN heading 8521.
      
      
        57.      In the light of the foregoing the combined examination of the relevant elements suggests classification of the apparatus at
      issue under CN heading 8471, since it performs principally the function of data processing for monitoring purposes. Nevertheless,
      it is a matter for the national court to define precisely the functions of the apparatus and to classify it on that basis.
      
      
       4. General rules 2 to 5
      
        58.      In the light of my conclusions above it is not necessary to have recourse to general rules 2 to 5 of the CN. The precise definition
      of the functions of the apparatus in the light of the wording of the headings and explanatory notes will permit the national
      court to classify it decisively either under CN heading 8471 or under CN heading 8521.
      
      
       5. Subheading
      
        59.      For subheading classification within the Harmonised System under CN heading 8471 the following subheadings are available:
      10 (‘analogue or hybrid automatic data-processing machines’), 30 (‘portable digital automatic data-processing machines, weighing
      not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display’), 41 (‘other digital automatic
      data-processing machines comprising in the same housing at least a central processing unit and an input and output unit, whether
      or not combined’), 49 (‘other digital automatic data-processing machines: other, presented in the form of systems’), 50 (‘digital
      processing units other than those of subheading 8471 41 or 8471 49, whether or not containing in the same housing one or two
      of the following types of unit: storage units, input units, output units’), 60 (‘input or output units, whether or not containing
      storage units in the same housing’), 70 (‘storage units’), 80 (‘other units of automatic data-processing machines’), 90 (‘other’).
      
      
        60.      Subheadings 10, 30, 60 and 70 can be excluded simply on the basis of their wording. In so far as it can be ascertained, subheadings
      41 and 49 must also be eliminated since the apparatus is evidently not supplied with an output unit (for example, a monitor)
      nor as a system, but as an independent item. Subheadings 50, 80 and 90 remain. Since in this case the Explanatory Notes do
      not provide clarification general rule 6 must be used to justify recourse to general rule 3(a), according to which the most
      specific subheading should be chosen. In this case, that is subheading 50 since it does not refer in a general manner to all
      types of ‘automatic data-processing machines’ but specifically relates to ‘digital processing units’, which clearly includes
      the apparatus in question.
      
      
        61.      For the purposes of classification under a subheading of the Combined Nomenclature the available subheadings would then be
      10 (‘for use in civil aircraft’) and 90 (‘other’). In this case subheading 90 would therefore be appropriate.
      
      
        62.      In the light of the foregoing the combined examination of the relevant elements suggests a classification of the apparatus
      at issue under CN heading 8471 50 90. Nevertheless, it is a matter for the national court to define precisely the functions
      of the apparatus and to classify it on that basis.
      
       
      VII –  Conclusion 
        63.      In the light of the above analysis I propose that the Court answer the question as follows:
      ‘In order to classify an article in the Combined Nomenclature, first the intended use and material composition of the article
      to be classified must be precisely determined and then, having regard to those characteristics, to the terms of the relevant
      headings and to the notes to the corresponding sections and chapters it must where possible be decisively classified. In so
      doing, Note 5(E) of the Combined Nomenclature in the version of Annex I to Regulation (EC) No 2031/2001 amending Annex I to
      Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 2001 L 279,
      p. 1) is to be interpreted as meaning that the expression ‘a function other than that of data processing’ also includes a
      function which can be achieved by means of data processing. It is for the national court to determine whether in the light
      of its characteristics the article to be classified performs the function of data processing or some other function.’
      
      
       1 –
         
         Original language: German.
      
      2 –
         
         OJ 1987 L 256, p. 1.
            
         
      
      3 –
         
         OJ 2001 L 279, p. 1.
            
         
      
      4 –
         
         Ikegami refers to Case C-11/93 Siemens Nixdorf [1994] ECR I-1945, Case C-382/95 Techex [1997] ECR I-7363, Case C-339/98 Peacock [2000] ECR I-8947, Case C-463/98 Cabletron [2001] ECR I-3495 and Case C-479/99 CBA Computer [2001] ECR I-4391.
            
         
      
      5 –
         
         Ikegami refers to Case 36/71 Henck [1972] ECR 187, paragraph 4, Case 145/81 Wünsche [1982] ECR 2493, paragraph 12, Case C-328/97 Glob-Sped [1998] ECR I-8357, paragraph 26 and Case 114/80 Ritter [1981] ECR 895, paragraph 8.
            
         
      
      6 –
         
         Case T-243/01 Sony Computer Entertainment Europe v Commission [2003] ECR II-0000, paragraph 118.
            
         
      
      7 –
         
         The first two digits of the 11-digit code indicate the chapter, the third and fourth digit the heading, the fifth and sixth
            digit the subheading of the Harmonised System, the seventh and eighth digit the subheading of the Combined Nomenclature, the
            ninth and tenth digit the TARIC code and the eleventh digit the national code.
            
         
      
      8 –
         
         According to the product description of the apparatus. It is available at http://www.ikegami.com/cb/products/sdrg8000.html
            (last accessed on 14 December 2004).
            
         
      
      9 –
         
         See footnote 8.
            
         
      
      10 –
         
         See footnote 8.
            
         
      
      11 –
         
         See World Customs Organisation, Harmonized Commodity Description and Coding System — Explanatory Notes, Section XVI, Position 85.21, pp. 1662-1663 (February 2004 version).
            
         
      
      12 –
         
         See Bundesministerium der Finanzen, Erläuterungen zur Kombinierten Nomenklatur, heading 8521 (version in force as at 17 May 2004). On the other hand no relevant information could be gleaned from: Commission
            of the European Communities, Explanatory Notes to the Combined Nomenclature of the European Communities, OJ 1998 C 287, p.1 et seq.
            
         
      
      13 –
         
         See also the relevant classification of the World Customs Organisation, Harmonised Commodity Description and Coding System – Compendium of Classification Opinions, Section XVI, Position 8521.90, p. XVI/20 E (February 2004 version).