French Republic v Commission of the European Communities.
Date: 1995-12-14
19 In such matters the Council has conferred upon the Commission, acting in cooperation with the customs experts of the Member States, a broad discretion to define the subject-matter of tariff headings falling to be considered for the classification of particular goods (see Case C-265/89 Vismans Nederland [1990] ECR I-3411, paragraph 13, and Case C-401/93 GoldStar Europe [1994] ECR I-5587, paragraph 19).
20 However, the Commission' s power to adopt the measures mentioned in Article 9(1)(a), (b), (d) and (e) of Regulation No 2658/87 does not authorize it to alter the subject-matter of the tariff headings which have been defined on the basis of the harmonized system established by the Convention whose scope the Community has undertaken, under Article 3 thereof, not to modify.
23 03 10 ° Residues of starch manufacture and similar residues:
° ° Residues from the manufacture of starch from maize (excluding concentrated steeping liquors), of a protein content, calculated on the dry product:
23 03 10 11 ° ° ° Exceeding 40% by weight
23 03 10 19 ° ° ° Not exceeding 40% by weight
23 03 10 90 ° ° Other
...
23 09 Preparations of a kind used in animal feeding".
3 By virtue of Article 9(1)(a), (b), (d) and (e) of Commission Regulation No 2658/87, the Commission has the power, according to the procedural rules laid down in Article 10, to adopt measures concerning the following:
"(a) application of the combined nomenclature and the Taric concerning in particular :
° the classification of goods in the nomenclatures referred to in Article 8,
° explanatory notes;
(b) amendments to the combined nomenclature to take account of changes in requirements relating to statistics or to commercial policy;
...
(d) amendments to the combined nomenclature and adjustments to duties in accordance with decisions adopted by the Council or the Commission;
(e) amendments to the combined nomenclature intended to adapt it to take account of technological or commercial developments or aimed at the alignment or clarification of texts;
..."
4 Article 1 of Commission Regulation (EEC) No 3492/91 of 29 November 1991 amending Regulation (EEC) No 2658/87, referred to above (OJ 1991 L 328, p. 80), adopted pursuant to Article 9 of the latter regulation, added the following Additional Note No 1 to Chapter 23 of the combined nomenclature:
"1. Subheadings 2303 10 11 and 2303 10 19 include only residues from the manufacture of starch from maize and do not cover blends of such residues with products derived from other plants or products derived from maize otherwise than in the course of production of starch by the wet process. These products may, however, contain residues from the extraction of maize germ oil by the wet process.
Their starch content may not exceed 28% by weight on the dry product in accordance with the method contained in Annex I.I to Directive 72/199/EEC of the Commission and their fat content cannot exceed 4,5% by weight on the dry product determined in accordance with method A contained in Annex I to Directive 84/4/EEC of the Commission."
5 Article 9 of Regulation No 2658/87 was also the basis on which the Commission adopted the contested regulation, which provides, in the first and fifth recitals in the preamble thereto, that, in order to ensure uniform application of the combined nomenclature it is necessary to adopt provisions concerning the classification of residues of starch manufacture and to specify the scope of subheading 2303 10 19 by replacing Additional Note No 1 to Chapter 23.
6 The new Additional Note No 1 in Article 1 of the contested regulation provides:
"1. Subheading 2303 10 19 includes only residues from the manufacture of starch from maize and does not cover blends of such residues with products derived from other plants or products derived from maize otherwise than in the course of the production of starch by the wet process.
These residues may, however, contain residues from the extraction of maize germ oil by the wet milling process, screenings from maize used in the wet process in a proportion not exceeding 15% by weight and residues of maize steep-water, from the wet process, including residues of steep-water used for the manufacture of alcohol or of other starch-derived products.
Their starch content may not exceed 28% by weight on the dry product in accordance with the method contained in Annex I.I to Directive 72/199/EEC of the Commission and their fat content cannot exceed 4,5% by weight on the dry product determined in accordance with method A contained in Annex I to Directive 84/4/EEC of the Commission."
7 The last recital in the preamble to the contested regulation states that the Combined Nomenclature Committee has not given its opinion within the time-limit indicated by its Chairman.
8 It is apparent from the documents before the Court that the Commission adopted both Regulation No 3492/91 and the contested regulation in the framework of the negotiations which, on behalf of the Community, it had conducted since 1991 with the United States of America on the importation into the Community of corn gluten feed from the USA.
9 It is established that corn gluten feed is a natural by-product derived from the extraction of starch from maize by the wet process and is classified under subheading 2303 10 of the combined nomenclature. It also appears from the case file that those products have been admitted into the territory of the Community since 1967 free from customs duties and levies.
10 Regulation No 3492/91 stated that the residues from the manufacture of starch may contain residues from the extraction of maize germ oil by the wet process and mentioned their maximum starch and fat content.
11 The purpose of the contested regulation is, according to its wording, to bring within subheading 2303 10 19 residues from the manufacture of starch from maize containing (i) screenings from maize used in the wet process in a proportion not exceeding 15% by weight and (ii) residues of maize steep-water, arising from the wet process, including residues of steep-water used for the manufacture of alcohol or of other starch-derived products.
12 That regulation thus makes clear that corn gluten feed incorporating screenings not exceeding a certain proportion and residues from the use of the steep-water used in such manufacture falls under subheading 2303 10 19 of the combined nomenclature.
13 The French Government considers, however, that, by reason of their composition, those products do not fall under subheading 2303 10 19 but under heading 2309 so that they must be subject to custom duties upon their importation into the Community.
14 In support of its action against the contested regulation, it puts forward four pleas in law alleging lack of competence of the Commission to adopt the contested regulation, breach of the International Convention on the Harmonized Commodity Description and Coding System, done at Brussels on 14 June 1983 and approved on behalf of the Community by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1, hereinafter "the Convention"), insufficient statement of reasons and misuse of powers.
15 It is appropriate to examine first the plea in law concerning the lack of competence of the Commission.
16 In this connection, the French Government observes that, in accordance with Article 9 of Regulation No 2658/87, the Commission has the power to provide clarifications on the combined nomenclature and to adopt, under Article 9(1)(a) thereof, explanatory notes. On the other hand, it has no power to amend the scope of a tariff heading which is also fixed by the harmonized system established by the Convention. In this case, the Commission amended, by means of the contested regulation, tariff heading 2303 and thus indirectly granted new tariff concessions to non-member States, whereas the Council alone has the power to do so.
17 The Commission replies that, by supplementing by means of the contested regulation Additional Note No 1 to Chapter 23 of the combined nomenclature, it did no more than clarify the tariff heading in question, a power conferred upon it by Article 9(1)(b), (d) and (e) of Regulation No 2658/87. It considers that it did not thus grant any new tariff concessions to non-member States.
18 It is to be noted first of all that, according to its preamble, the aim of the contested regulation is to adopt provisions concerning the classification of residues of starch manufacture and to specify the scope of subheading 2303 10 19.
19 In such matters the Council has conferred upon the Commission, acting in cooperation with the customs experts of the Member States, a broad discretion to define the subject-matter of tariff headings falling to be considered for the classification of particular goods (see Case C-265/89 Vismans Nederland [1990] ECR I-3411, paragraph 13, and Case C-401/93 GoldStar Europe [1994] ECR I-5587, paragraph 19).
20 However, the Commission' s power to adopt the measures mentioned in Article 9(1)(a), (b), (d) and (e) of Regulation No 2658/87 does not authorize it to alter the subject-matter of the tariff headings which have been defined on the basis of the harmonized system established by the Convention whose scope the Community has undertaken, under Article 3 thereof, not to modify.
21 It must therefore be considered whether the Commission, notwithstanding what is stated in the preamble to the contested regulation, has in fact amended heading 2303 of the combined nomenclature, thus exceeding the limit of the powers conferred upon it by Article 9 of Regulation No 2658/87.
22 The French Government claims in that regard that neither screenings from maize nor residues from steep-water used for the manufacture of alcohol or of other starch-derived products may be considered to be "residues of starch manufacture" falling under position 2303.
23 According to the French Government, it is apparent from the case-law of the Court (Case 268/87 Cargill [1988] ECR 5151) that the term "residues" refers only to products which are the direct result of an extraction process, to the exclusion of products, such as maize screenings, which were already in the basic product and do not undergo any change in the course of that process. Likewise, it does not refer to products, such as residues of steep-water used in the production of ethanol or other products, which derive from processing subsequent to and separate from the extraction process.
26 The Court recalls first of all that, when interpreting heading 23.04 concerning residues resulting from the extraction of vegetable oils, it has held that the term "residue" is not to be confused with that of "waste". That heading does not therefore cover all the products which remain after the extraction of a vegetable oil. On the contrary, in order to be covered by that heading they must be products which result directly from the operation of oil extraction and not products already in the basic product and not undergoing any change in the course of the oil-extraction process (see Cargill, paragraph 11, above).