CELEX: 61981CC0145
Language: en
Date: 1982-03-11 00:00:00
Title: Opinion of Mr Advocate General VerLoren van Themaat delivered on 11 March 1982. # Hauptzollamt Hamburg-Jonas v Ludwig Wünsche & Co. # Reference for a preliminary ruling: Bundesfinanzhof - Germany. # Export refunds. # Case 145/81.

OPINION OF MR ADVOCATE GENERAL
      VERLOREN VAN THEMAAT
      DELIVERED ON 11 MARCH 1982 (
            1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      1. The facts and the questions referred to the Court for a preliminary ruling
      On 27 April 1972 and 7 June 1972 Ludwig Wünsche & Co., the plaintiff in the main proceedings, exported to the United Kingdom consignments of cereal-based compound feeding-stuffs. Since at that time that country had not yet acceded to the Community, the plaintiff was entitled to claim refunds in respect of those exports under Regulation (EEC) No 661/72 of the Commission of 29 March 1972 (Journal Officiel 1972, L 79, p. 35) and Regulation (EEC) No 1121/72 of the Commission of 29 May 1972 (Journal Officiel 1972, L 126, p. 33). An application for those refunds was submitted to the Hauptzollamt [Principal Customs Office], which granted an amount of DM 102895.49. The composition of the feeding-stuffs was declared to be as follows:
      “66 % barley flour, other,
      20 % barley husks, milled,
      12 % potato-starch,
      1 % mixed minerals,
      1 % molasses.”
      The Hauptzollamt later discovered, however, that the basis on which the refund had initially been calculated, namely the assumption that the 66 % “barley flour, other” was a cereal product within the meaning of the reguations in question, was incorrect. It was found that that ingredient consisted of a mixture of ground barley and so-called “Schleifmehl” [dust from the hulling of barley] arising from the first and second hulling in the production of hulled barley. The Hauptzollamt considered that of that mixture only the ground barley should have been taken into account and accordingly claimed repayment of DM 89175.33. In the opinion of the Hauptzollamt, dust from the hulling of barley is a byproduct of the production of nulled barley and as such should be classified under tariff heading 23.03 of the Common Customs Tariff. That claim was dismissed by the Finanzgericht [Finance Court] on the ground inter alia that dust from the nulling of barley was also to be regarded as a cereal product. The Hauptzollamt appealed against that decision. The Bundesfinanzhof [Federal Finance Court], which was called upon to decide whether the expression “cereal products” within the meaning of the abovementioned regulations had been correctly interpreted, referred the following questions to the Court of Justice :
      
               “1.
            
            
               In determining the proportion of cereal products contained in compound feeding-stuffs within the meaning of Regulations (EEC) Nos 661/72 and 1121/72 of the Commission, is account to be taken also of products resulting from the polishing or hulling, and not the grinding, of cereal grains?
            
         
               2.
            
            
               Is the proportion of cereal products contained in compound feeding-stuffs within the meaning of the aforementioned regulations to be determined in relation to the total ingredients in the compound feeding-stuffs, resulting from the working or processing of cereals?
            
         
               3.
            
            
               If the second question is answered in the negative: can the term ‘cereal products’ within the meaning of the said regulations include a preparatory mixture of ground barley ana so-called ‘dust from the hulling of barley’?
            
         
               4.
            
            
               If the first question is answered in the affirmative and the third question in the negative: must the dust arising from each polishing or hulling process in the production of hulled barley, even split or crushed (Gerstengraupen), be taken into account separately in determining the proportion of cereal products contained in compound feeding-stuffs within the meaning of the said regulations?”
            
         2. The applicable Community law
      The common organization of the market in cereals was set up by Regulation No 120/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33). Pursuant to that regulation the Council adopted Regulation (EEC) No 968/68 of 15 July 1968 (Official Journal, English Special Edition 1968 (1), p. 244) on the system to be applied to cereal-based compound feeding-stuffs. The rules concerning the granting and fixing of the refunds for such feeding-stuffs were laid down by Regulation (EEC) No 1913/69 of the Commission of 29 September 1969 (Official Journal, English Special Edition 1969 (II), p. 403), whereas the specific amounts for the periods in question were determined by Regulation No 661/72 of 29 March 1972 and Regulation No 1121/72 of 29 May 1972.
      3. The first question
      The first question asked by the Bundesfinanzhof raises the problem whether dust from the hulling of barley falls within the scope of the two Commission regulations and therefore whether, in determining what is to be understood by the expression “cereal products”, the method of production (grinding or polishing) is relevant. Article 7(1) of Regulation No 968/68 defines the basic scope of the system of refunds as follows:
      “The expon refund shall be fixed taking into account only certain products used in the manufacture of compound feeding-stuffs for which an export refund may be fixed.”
      Further to that provision, the fourth recital in the preamble to each of Regulations Nos 661/72 and 1121/72 of the Commission states as follows :
      “... the export refund for cereal-based compound feeding-stuffs must be determined by taking into account only products which are normally used in the manufacture of compound feeding-stuffs and for which an export refund may be fixed.”
      With regard to the “cereal products” contained in the compound feeding-stuffs, footnote 2 to the annex to each of those regulations refers to Chapter 10 and to tariff headings 11.01 and 11.02 (with the exception of tariff subheading 11.02 G) of the Common Customs Tariff (the version of the Common Customs Tariff applicable in 1972 was published in Journal Officiel 1972, L 1). In the light of that reference, the following are covered by the expression “cereal products” contained in Regulations Nos 661/72 and 1121/72:
      
               —
            
            
               Cereals (Chapter 10);
            
         
               —
            
            
               Cereal flours (tariff heading 11.01);
            
         
               —
            
            
               Cereal groats and cereal meal; other worked cereal grains (for example, rolled, flaked, polished, pearled or kibbled but not further prepared) (tariff heading 11.02).
            
         In view of the fact that neither regulation adopts its own nomenclature or contains contrary definitions, the question as to whether dust from the hulling of barley is covered by the expression “cereal products”, as defined above, must be answered by interpreting the Common Customs Tariff. Such a view was expressed by Mr Advocate General Mayras in Case 80/72 (Koninklijke Lassiefabrieken v Hoofdproduktschap voor Akkerbouwprodukten [1973] ECR 635, at p. 660). Since, owing to the nature of the product, Chapter 10 (cereals) cannot apply, regard must be had to headings 11.01 and 11.02 of the Common Customs Tariff and to the criteria on the basis of which products are classified under those headings. According to Note 2 A to the chapter in question, the decisive criteria for the classification of barley are as follows: a starch content exceeding 45 % and an ash content not exceeding 3 %. According to the notes, products from the milling of cereals which do not satisfy those criteria fall to be classified under heading 23.02 of the Common Customs Tariff, which includes inter alia“bran, sharps and other residues derived from the sifting, milling or working of cereals or of leguminous vegetables”. Therefore, if the abovementioned conditions are met, it is of no further relevance how the product arose, in this case whether from grinding or from polishing. The significance of both criteria has already been the subject of detailed consideration by the Court in Case 80/72 (Koninklijke Lassiefabrieken v Hoofdproduktschap voor Akkerbouwprodukten, cited above). More generally, such an interpretation is also in conformity with the principle — alreadystated by the Court of Justice on several occasions — that the classification of goods under the Common Customs Tariff should be based on objective characteristics and therefore on the composition of the product but not on the manner in which it arose or, as the case may be, the method of production. I refer in that regard to the judgments in Case 36/71 Henck ECR 187, Case 128/73 Past [1973] ECR 1277, Case185/73 König [1974] ECR 607, Case 53/75 Vandertaelen [1975] ECR 1647, Joined Cases 98 and 99/75 Carstens [1976] ECR 241, Case 38/76 Luma [1976] ECR 2027 and Case 62/77 Carlsen [1977] 2343.
      For the reasons set out above I propose that the following reply be given to the Bundesfinanzhofs first question:
      Whether products which have arisen from the polishing or grinding of cereals grains are to be regarded as cereal products within the meaning of Regulations Nos 661/72 and 1121/72 must be determined solely by the application of the qualitative criteria for classification (in this case their starch and ash content) which underlie headings 11.01 and 11.02 of the Common Customs Tariff, to which the abovementioned regulations refer in footnote 2 to their respective annexes. The method of production is therefore irrelevant.
      4. The second question
      Now that it has been ascertained what is to be understood by the expression “cereal products” the question arises whether for the purpose of determining the refunds the product as a whole is to be considered in the light of the abovementioned criteria or whether this must be done separately in respect of each ingredient. This question, which is in effect the second question raised by the Bundesfinanzhof, may be answered by referring directly to Article 7 of Regulation No 968/68, which lays down the basis of the system of export refunds. The wording of Article 7 (1) (“... taking into account only certain products...”) suggests that in the case of composite products the calculation of the refund is to be based on the individual ingredients. Indications to the same effect are also given by Article 2(1) of Regulation No 1913/69, which reads as follows:
      “The exporter shall declare to the competent agencies the full composition of the cereal-based compound feeding-stuffs, giving the percentages of each kind of product entering therein broken down by tariff headings.”
      The textual arguments advanced in reply to this question may be supplemented by an examination of the system of expon refunds applicable to feeding-stuffs. It is clear from the third recital in the preamble to Regulation No 968/68 that for the purpose of calculation this system is linked to maize, a highly nutritious foodstuff. It is clear from Article 7 of that regulation that as far as possible products of similar quality are to be taken into account for the purpose of the refunds and that waste products and residues are to be excluded, even though they too can be used as feeding-stuffs.
      Accordingly, the second recital in the preamble to Regulation No 1913/69 states as follows:
      “Whereas for this purpose account should be taken only of products entering into compound feeding-stuffs in such quantity and having such characteristics as are truly representative of the composition of the cereal-based feeding-stuffs in question, for example cereals, cereal flours and unprepared products derived from the milling or treatment of cereals; and other products which are secondary or insignificant components of this type of feeding-stuffs should be excluded.”
      Consequently, the refund for feeding-stuffs is determined to a large extent by reference to the quality thereof, in this case therefore by reference to products with a low ash content and a high starch content. In view of the difficulty involved in analysing feeding-stuffs into their individual components, Article 2 (1) of Regulation No 1913/69 imposed an obligation on exporters to make a detailed declaration of those components, referring to the relevant headings of the Common Customs Tariff.
      I therefore propose that the following reply be given to the Bundesfinanzhofs second question:
      The proportion of cereal products contained in compound feeding-stuffs within the meaning of Regulations Nos 661/72 and 1121/72 is to be determined by reference to the individual ingredients which have arisen from the working or processing of cereals.
      5. The third and fourth questions
      
         The answers to the first and second questions also provide the answers to the third and fourth questions submitted by the Bundesfinanzhof. In view of the difficulty involved in analysing compound feeding-stuffs, Article 2(1) of Regulation No 1913/69 requires, as stated above, a detailed declaration of the separate ingredients. If a product were merely declared to be a “compound”, this would lead to the risk of excessive refunds being paid. The argument put forward by the plaintiff that such a declaration might be made on importation is unconvincing. This case concerns the determining of refunds on exportation and not tariff classification on importation. The obligation to declare the individual ingredients
         derives not from the Common Customs Tariff, which merely serves as a basis enabling the declaration to be made, but from Regulation No 1913/69, which forms part of the system of export refunds applicable to feeding-stuffs. Thus the reply to the second question also covers the third and fourth questions and a separate formulation is unnecessary.
      
      6. The question of the nullity of Regulations Nos 661 and 1121/72
      The plaintiff concludes its observations with the assertion that both Commission regulations are invalid. That invalidity is said to arise from a disparity between the basic scope of the system of export refunds, as defined by Article 7(1) of Regulation No 968/68, and the fourth recital in the preamble to each of the two Commission regulations. The German version of Article 7(1) refers to “... bestimmte Erzeugnisse ...”, whereas both the Commission regulations refer to “... Erzeugnisse ... die gewöhnlich ...”. Since the Bundesfinanzhof has not raised any questions concerning this submission by the plaintiff, it seems to me that it is unnecessary for the Court of Justice to consider it. Should the Court nevertheless wish to do so, my view is that this submission should be rejected.
      There is indeed clearly a discrepancy in the drafting of the German text of the abovementioned provisions, which is also to be found in the French text, where reference is made to “... certains produits ...” and “... produits qui entrent habituellement ...”. However, it is clear inter alia from the Dutch text, which in both cases refers to “bepaalde produkten”, that the discrepancy lies in the drafting and is not a discrepancy of substantive law which would have the effect of restricting the scope of Regulations Nos 661/72 and 1121/72 by comparison with Regulation No 968/68. The plaintiff was, moreover, unable to show that the restricted wording of the preamble to the two Commission regulations was reflected in a decisive manner in the provisions themselves. Nor is it possible to accept the plaintiff's submission that as a result of this disparity in the drafting of the provisions the reference which footnote 2 in the annex makes to the relevant headings of the Common Customs Tariff is in conflict with Regulation No 968/68. That would lead to the result — incompatible with the system of refunds for feeding-stuffs — that refunds could be granted for products falling under tariff heading 23.02 of the Common Customs Tariff (including inter alia waste products). As was stated above, a specific feature of the system is that the refunds are linked to the quality of the product.
      (
            1
         )	Translated from the Dutch.