1 These requests for a preliminary ruling concern the interpretation of the Combined Nomenclature (‘the CN’) set out 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 (OJ 1987 L 256, p. 1), in the versions resulting from Commission Regulation (EC) No 1719/2005 of 27 October 2005 (OJ 2005 L 286, p. 1) and from Commission Regulation (EC) No 1214/2007 of 20 September 2007 (OJ 2007 L 286, p. 1).
2 The requests have been made in proceedings between Toorank Productions BV and the Staatssecretaris van Financiën (Netherlands State Secretary for Finance) concerning the classification of alcoholic beverages for customs purposes.
3 The Customs Cooperation Council, now the World Customs Organisation (WCO), was created by the Convention establishing a Customs Cooperation Council, concluded at Brussels on 15 December 1950. The Harmonised Commodity Description and Coding System (‘the HS’) was drawn up by the WCO and established by the International Convention on the Harmonised Commodity Description and Coding System, concluded at Brussels on 14 June 1983 and approved on behalf of the European Economic Community, together with the Protocol of Amendment thereto of 24 June 1986, by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1).
4 Pursuant to Article 3(1) of that International Convention, each Contracting Party undertakes that its tariff and statistical nomenclatures will be in conformity with the HS, that it will use all the headings and subheadings of the HS without addition or modification, together with their related numerical codes, and that it will follow the numerical sequence of that system. Each Contracting Party also undertakes to apply the General Rules for the interpretation of the HS and all the HS section, chapter and subheading notes, without modifying their scope.
5 The explanatory notes and classification opinions adopted by the HS Committee are approved by the WCO, under the conditions laid down in Article 8 of that Convention.
6 Heading 22.06 of the HS is worded as follows: ‘Other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included’. The second paragraph of the HS explanatory note relating to that heading states: ‘All these beverages may be either naturally sparkling or artificially charged with carbon dioxide. They remain classified under this heading even when fortified with added alcohol or when their alcohol content has been increased by further fermentation, provided that they retain the character of products classified under this heading.’
7 Heading 22.08 of the HS is worded as follows: ‘Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol.; spirits, liqueurs and other spirituous beverages’. The HS explanatory note relating to that heading states: ‘This heading covers, whatever their alcoholic strength: ... (B) Liqueurs, which are spirituous beverages to which sugar, honey or other natural sweeteners and extracts or essences have been added (e.g., spirituous beverages obtained through distillation, or through the mixing of ethyl alcohol or distilled spirits with one or more of the following products: fruits, flowers or other parts of plants, extracts, essences, essential oils or juices, including concentrates). Those products also include liqueurs which contain sugar crystals, fruit juice liqueurs, egg liqueurs, herb liqueurs, berry liqueurs, spice liqueurs, tea liqueurs, chocolate liqueurs, milk liqueurs and honey liqueurs. ...’
8 The CN is based on the HS, from which it takes its six-digit headings and subheadings, with only the seventh and eighth digits forming subdivisions specific to the CN.
9 Pursuant to Article 12(1) of Regulation No 2658/87, as amended by Council Regulation (EC) No 254/2000 of 31 January 2000 (OJ 2000 L 28, p. 16), the European Commission is to adopt each year a regulation reproducing the complete version of the CN, together with the rates of duty, as resulting from measures adopted by the Council of the European Union or the Commission. The said regulation is to apply from 1 January of the following year.
10 The wording of headings 2206 and 2208 and the General Rules for the interpretation of the CN set out in Subsection A of Section I of Part One thereof is identical in the version of the CN resulting from Regulation No 1719/2005 and the version of the CN resulting from Regulation No 1214/2007.
11 That subsection provides: ‘Classification of goods in the Combined Nomenclature shall be governed by the following principles: 1. The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions. ... 3. When, by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification shall be effected as follows: ... (b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to [rule] 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; ...’
12 Headings 2206 and 2208 of the CN reproduce the wording of headings 22.06 and 22.08 of the HS.
13 Toorank Productions submitted an application to the tax authorities for binding tariff information in respect of a beverage known as ‘Petrikov Creamy Green’, asking them to classify that beverage under subheading 2206 00 59 of the CN. By decision confirmed following an administrative appeal, those authorities classified that beverage under subheading 2208 70 10 of the CN.
14 The beverage in question is manufactured by mixing a fermented beverage, known as ‘Ferm Fruit’, with distilled alcohol, sugar syrup, skimmed milk, vegetable fat and aromatic substances. It has an alcoholic strength by volume of 13.4%, and at least 51% of the alcohol which it contains is the result of fermentation. Ferm Fruit, which has an alcoholic strength by volume of 16%, is prepared using an alcohol resulting from the fermentation of fruit which is then purified through filtration. Its smell, colour and taste are neutral. Used for the manufacture of end products, Ferm Fruit is also suitable for human consumption as it is.
15 After an action was brought before it by Toorank Productions against the tax authorities’ decision, the Rechtbank Amsterdam (District Court, Amsterdam, the Netherlands) annulled that decision, considering that Petrikov Creamy Green fell to be classified under subheading 2206 00 59 of the CN.
16 After an appeal was lodged by the State Secretary for Finance, the Gerechtshof te Amsterdam (Regional Court of Appeal, Amsterdam, the Netherlands) held that it was appropriate to classify Petrikov Creamy Green as a liqueur falling under subheading 2208 70 10 of the CN by reason of its high sugar content, the addition of distilled alcohol, aromatic substances and a cream base, and its green colour.
17 Toorank Productions has lodged an appeal in cassation before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) against that decision.
18 That court notes, first, that heading 2206 of the CN also includes mixtures of fermented beverages and non-alcoholic beverages and that, by virtue of the HS explanatory note relating to heading 22.06 of the HS, such beverages remain classified under that heading even when fortified with added alcohol or when their alcohol content has been increased by further fermentation, provided that they retain the character of products classified under that heading. Second, heading 2208 of the CN covers liqueurs, which generally have an alcoholic strength by volume of more than 13.4%. The addition of distilled alcohol to a beverage falling under heading 2206 of the CN does not automatically mean that that beverage will be excluded from that heading. Nevertheless, if the quantities of fermented alcohol and distilled alcohol in a product such as Petrikov Creamy Green are not decisive for the classification of that product and if the beverage to which the distilled alcohol has been added has the properties and characteristics of products falling under heading 2208 of the CN, that product should, according to that court, be classified under that second heading.
19 The referring court is unsure how the judgment of 7 May 2009 in Siebrand (C‑150/08, EU:C:2009:294) should be interpreted. In particular, it questions whether that judgment, particularly paragraph 35 thereof, should be interpreted as meaning that the quantity of distilled alcohol added, assessed in terms of both volume and alcohol content, is the element which determines the classification under heading 2208 of the CN, whatever the other characteristics and properties of the product under consideration might be, or whether it is necessary, in all cases, to verify whether the organoleptic characteristics and the intended use of that product correspond to those of beverages which are classified under heading 2208 of the CN.
20 In those circumstances the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Should heading 2206 of the CN be interpreted as meaning that a beverage with an alcoholic strength by volume of 13.4% which is manufactured by mixing a purified, alcoholic beverage (base) known as “Ferm Fruit” - obtained through fermentation of an apple concentrate - with sugar, aromatic substances, colouring and flavouring agents, thickening agents, preservatives and distilled alcohol, where that distilled alcohol does not exceed, either in volume or in percentage, 49% of the alcohol present in that beverage, while 51% thereof is alcohol resulting from fermentation, must be classified under that heading? (2) If not, should subheading 2208 70 of the CN be interpreted as meaning that such a beverage must be classified as a liqueur under that subheading?’
21 Toorank Productions received an adjustment notice regarding the excise duties claimed following the clearing from its bonded warehouse of various alcoholic beverages during the period running from 1 to 31 October 2008. That notice was confirmed by a decision of the tax authorities adopted following an administrative appeal.
22 The products in respect of which the excise duty was claimed are Ferm Fruit on the one hand and the beverages manufactured using a Ferm Fruit base to which various ingredients are added (‘the Ferm Fruit based beverages’) on the other.
23 Ferm Fruit is a beverage with an alcoholic strength by volume of 16%. One litre of that product is manufactured using 275 ml of sugar syrup, 711 ml of demineralised water, 10 ml of apple concentrate and 4 ml of vitamins and minerals. Those ingredients are mixed, then the mixture is pasteurised and wine yeast is added, which triggers the fermentation process. The liquid obtained from that process is purified using various filtration techniques such as ultrafiltration, kieselguhr filtration, microfiltration and carbon filtering. It does not contain distilled alcohol and has not undergone any process designed to increase the level of alcohol which it contains. It is neutral in terms of smell, colour and taste. Suitable for human consumption, it is not exclusively designed for the manufacture of other products.
24 The Ferm Fruit based beverages are beverages with an alcoholic strength by volume of 14% which are manufactured by adding sugar, aromatic substances, colouring and flavouring agents, thickening agents and/or preservatives and, for one of those beverages, cream, to Ferm Fruit. The alcohol in those beverages is exclusively obtained through fermentation without the addition of distilled alcohol. Ferm Fruit represents between 80% and 90% of the content of those beverages.
25 In the decision at issue in the main proceedings, the tax authorities considered that Ferm Fruit and the Ferm Fruit based beverages fell under heading 2208 of the CN.
26 Toorank Productions brought an action against that decision before the Rechtbank te Breda (District Court, Breda, the Netherlands), which annulled the decision and reduced the amount of the adjustment.
27 After an appeal was lodged by Toorank Productions and the State Secretary for Finance, the Gerechtshof te ’s-Hertogenbosch (Regional Court of Appeal, ’s-Hertogenbosch, the Netherlands) confirmed the decision of the Rechtbank te Breda (District Court, Breda), but held that Ferm Fruit fell under heading 2206 of the CN and that the Ferm Fruit based beverages fell under heading 2208 of the CN.
28 Toorank Productions has lodged an appeal in cassation and the State Secretary for Finance has lodged a cross-appeal in cassation before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands).
29 The referring court considers that Ferm Fruit could be classified under both heading 2206 of the CN, in so far as the alcohol which it contains is obtained through fermentation, and under heading 2208 of the CN, in so far as, being colourless, odourless and tasteless, it resembles, in terms of its organoleptic properties, an alcoholic product resulting from distillation. However, it would appear that the HS explanatory notes exclude beverages obtained through fermentation from that second heading.
30 On the other hand, that court notes that it is apparent from the judgment of 14 July 2011 in Paderborner Brauerei Haus Cramer (C‑196/10, EU:C:2011:487) that products resulting from a process of fermentation followed by a process of ultrafiltration may fall under heading 2208 of the CN where they have acquired the properties of products falling under that heading.
31 Regarding the Ferm Fruit based beverages, the referring court considers that, were it to be necessary to classify Ferm Fruit under heading 2206 of the CN, those beverages could not fall under heading 2208 of the CN. That court infers from the wording of heading 2208 of the CN and the explanatory notes relating thereto that that heading includes only beverages - including liqueurs - which contain distilled alcohol. It also notes that the Ferm Fruit based beverages have a relatively low alcoholic strength by volume (14%) compared to the generally high alcoholic strength by volume of liqueurs and other spirituous beverages. However, as the Ferm Fruit based beverages have lost the properties of products falling under heading 2206 of the CN, the referring court acknowledges that the classification of those beverages under that heading is open to discussion.
32 In those circumstances the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Should heading 2206 of the CN be interpreted as meaning that the beverage known as “Ferm Fruit” which is obtained through fermentation of an apple concentrate, is also used as a beverage base for the manufacture of certain other beverages, has an alcoholic strength by volume of 16%, and, as a result of purification (including ultrafiltration), is neutral in terms of colour, smell and taste, and to which no distilled alcohol has been added, must be classified under that heading? If not, should heading 2208 of the CN be interpreted as meaning that such a beverage must be classified under that heading? (2) Should heading 2206 of the CN be interpreted as meaning that a beverage with an alcoholic strength by volume of 14% which is manufactured by mixing the beverage base described in question 1 above with sugar, aromatic substances, colouring and flavouring agents, thickening agents and preservatives, and which does not contain any distilled alcohol, must be classified under that heading? If not, should heading 2208 of the CN be interpreted as meaning that such a beverage must be classified under that heading?’
33 By decision of the President of the Court of 7 January 2015, Cases C‑532/14 and C‑533/14 were joined for the purposes of the written and oral procedure and the judgment.
34 First of all, in accordance with the settled case-law of the Court, in the interests of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the CN and in the section or chapter notes (see judgment of 11 June 2015 in Amazon EU, C‑58/14, EU:C:2015:385, paragraph 20 and the case-law cited).
35 Next, it is common ground that the intended use of products may constitute an objective criterion for classification if it is inherent to those products, having regard to the objective characteristics and properties of those products (see judgment of 30 April 2014 in Nutricia, C‑267/13, EU:C:2014:277, paragraph 21 and the case-law cited). Nevertheless, the intended use of a product is a relevant criterion only where the classification can be made on the sole basis of the objective characteristics and properties of that product (see judgment of 16 December 2010 in Skoma-Lux, C‑339/09, EU:C:2010:781, paragraph 47 and the case-law cited).
36 Lastly, the explanatory notes drawn up by the Commission as regards the CN and by the WCO as regards the HS are an important aid to the interpretation of the scope of the various tariff headings but do not have legally binding force (see judgment of 4 March 2015 in Oliver Medical, C‑547/13, EU:C:2015:139, paragraph 46 and the case-law cited).
37 By its first question in Case C‑533/14, the referring court asks, in essence, whether, on a proper construction of the CN, a beverage, such as Ferm Fruit, which is obtained through fermentation of an apple concentrate and is designed to be consumed either undiluted or as a base in other beverages, being neutral in terms of colour, smell and taste as a result of purification (including ultrafiltration) and having an alcoholic strength by volume, without the addition of distilled alcohol, of 16% falls under heading 2206 of that nomenclature, or whether that beverage is covered by heading 2208 of that nomenclature.
38 On the one hand, it should be borne in mind that it is apparent from the HS explanatory note relating to heading 22.06 of the HS, which is identical to heading 2206 of the CN, that products obtained through fermentation remain classified under that heading provided that they retain the character of products classified under that heading, namely that of fermented beverages (see, to that effect, judgments of 7 May 2009 in Siebrand, C‑150/08, EU:C:2009:294, paragraph 26, and 16 December 2010 in Skoma-Lux, C‑339/09, EU:C:2010:781, paragraph 46 and the case-law cited).
39 On the other hand, it should be noted that products which are obtained not exclusively through fermentation but also through a process of purification which leads to those products losing the properties and characteristics of fermented beverages and acquiring those of ethyl alcohol, which is classified under heading 2208 of the CN, fall under that second heading (see, to that effect, judgment of 14 July 2011 in Paderborner Brauerei Haus Cramer, C‑196/10, EU:C:2011:487, paragraph 37).
40 It is apparent from the order for reference that Ferm Fruit, which has an alcohol content of 16%, is obtained through fermentation of an apple concentrate followed by various filtration procedures. Regarding the characteristics and properties of Ferm Fruit, it is also apparent from the order for reference that Ferm Fruit has a neutral colour, smell and taste and thus resembles an alcoholic product resulting from distillation.
41 First of all, it should be borne in mind that, in accordance with the case-law referred to in paragraph 34 above, the classification of a product chiefly depends on its objective characteristics and properties.
42 Next, it is apparent from the wording of heading 2208 of the CN, firstly, that that heading includes both beverages and intermediate products which are used to manufacture other products, secondly, that the only criterion laid down regarding the alcohol content is that the maximum alcoholic strength by volume is to be 80%, and, thirdly, that no criterion is established in relation to the method of manufacture of products falling under that heading.
43 Lastly, it is apparent from the case-law cited in paragraphs 38 and 39 above that a product obtained as a result of fermentation followed by a process of purification falls under heading 2208 of the CN in so far as it has lost the properties of the fermented beverages falling under heading 2206 of the CN and acquired those of the ethyl alcohol covered by heading 2208 of the CN.
44 Consequently, since Ferm Fruit has acquired, following various processes of purification, the objective properties of the ethyl alcohol falling under heading 2208 of the CN, namely, a neutral colour, smell and taste, it falls under heading 2208 of the CN.
45 In the light of all of the foregoing, the answer to the first question referred in Case C‑533/14 is that, on a proper construction of the CN, a beverage, such as Ferm Fruit, which is obtained through fermentation of an apple concentrate and is designed to be consumed either undiluted or as a base in other beverages, being neutral in terms of colour, smell and taste as a result of purification (including ultrafiltration) and having an alcoholic strength by volume, without the addition of distilled alcohol, of 16% falls under heading 2208 of that nomenclature.
46 By its second question in Case C‑533/14, the referring court asks, in essence, whether, on a proper construction of the CN, beverages with an alcoholic strength by volume of 14% which are manufactured by adding sugar, aromatic substances, colouring and flavouring agents, thickening agents and preservatives and, for one of those beverages, cream, to Ferm Fruit, and which do not contain distilled alcohol, fall under heading 2206 of the CN or whether such beverages fall under heading 2208 of the CN.
47 It should be stated at the outset that it is apparent from the order for reference in Case C‑533/14 that a certain number of additives - such as sugar, aromatic substances, colouring and flavouring agents, thickening agents and preservatives and, for one of the products concerned, cream - have been added to Ferm Fruit, which falls under heading 2208 of the CN.
48 However, as was noted by the Advocate General in point 76 of his Opinion, it is apparent from the wording of the HS explanatory note relating to heading 22.08 of the HS, which is identical to heading 2208 of the CN, that that heading includes products which contain various additives, such as, for example, sugar and aromatic substances.
49 Consequently, the Ferm Fruit based beverages to which, inter alia, sugar and aromatic substances have been added have the objective characteristics of a liqueur and fall under heading 2208 of the CN.
50 Therefore, the answer to the second question referred in Case C‑533/14 is that, on a proper construction of the CN, beverages with an alcoholic strength by volume of 14% which are manufactured by adding sugar, aromatic substances, colouring and flavouring agents, thickening agents and preservatives and, for one of those beverages, cream, to Ferm Fruit, and which do not contain distilled alcohol, fall under heading 2208 of that nomenclature.
51 By its question, the referring court asks, in essence, whether, on a proper construction of the CN, a beverage with an alcoholic strength by volume of 13.4% which is manufactured by adding sugar, aromatic substances, colouring and flavouring agents, thickening agents, preservatives and distilled alcohol to Ferm Fruit, where that distilled alcohol does not exceed, either in volume or percentage, 49% of the alcohol present in that beverage, with the remaining 51% resulting from a process of fermentation, falls under heading 2206 of that nomenclature or whether that beverage is covered by heading 2208 of the CN.
52 It should be noted at the outset that it is apparent from the order for reference that the referring court considers that the beverage at issue in the main proceedings in Case C‑532/14 possesses the characteristics and properties of products falling under heading 2208 of the CN.
53 Nevertheless, that court has doubts as to the interpretation of the criteria established in the judgment of 7 May 2009 in Siebrand (C‑150/08, EU:C:2009:294) concerning the classification for customs purposes of beverages which are manufactured by adding distilled alcohol and other substances to a fermented beverage base.
54 More specifically, that court is unsure whether those criteria constitute a set of criteria, all of which must be fulfilled in order for a beverage to be regarded as falling under CN heading 2208, or whether it is necessary to ascribe greater importance to the respective quantities of fermented alcohol and distilled alcohol than to the other objective characteristics and properties of the products concerned.
55 In that regard, it should be noted that the Court clearly stated, in paragraph 35 of the judgment of 7 May 2009 in Siebrand (C‑150/08, EU:C:2009:294), that, in determining the essential character of a product for the purposes of rule 3(b) of the CN, a number of objective characteristics and properties may be taken into account. Thus, it assessed the contribution of the distilled alcohol contained in the products in question to the volume and alcohol content of those products. Then, in paragraphs 36 and 37 of that judgment, the Court examined the organoleptic characteristics of those products as well as, in paragraph 38, their intended use, arriving, in paragraph 39, at a solution based on a global assessment of those three criteria.
56 As was noted by the Advocate General in point 84 of his Opinion, the Court’s focus, in paragraph 35 of the judgment of 7 May 2009 in Siebrand (C‑150/08, EU:C:2009:294), on the fact that the proportion of distilled alcohol was greater than the proportion of fermented alcohol, was a result of the fact that, in the case giving rise to that judgment, the alcoholic strength by volume of the products in question was much more a result of the distilled alcohol than of the fermented alcohol that those products contained.
57 It follows from the foregoing that the fact that the proportion of one type of alcohol may be larger than that of another type of alcohol is only one of several criteria to be taken into account when determining, in accordance with rule 3(b) of the CN, which substance gives the product under consideration its essential characteristics.
58 However, it must be observed that, unlike the products at issue in the case giving rise to the judgment of 7 May 2009 in Siebrand (C‑150/08, EU:C:2009:294), rule 3(b) of the CN does not govern the classification of the beverage at issue in the main proceedings. As was noted by the Advocate General in point 88 of his Opinion, the classification of the beverage Petrikov Creamy Green is based on the criterion relating to the organoleptic properties and characteristics of that beverage.
59 Consequently, since such a beverage does not have the organoleptic properties and characteristics of beverages falling under heading 2206 of the CN, but has those of products falling under heading 2208 of the CN, it falls under that second heading.
60 It follows from all of the foregoing that the answer to the question referred to in Case C‑532/14 is that, on a proper construction of the CN, a beverage with an alcoholic strength by volume of 13.4% which is manufactured by adding sugar, aromatic substances, colouring and flavouring agents, thickening agents, preservatives and distilled alcohol to Ferm Fruit, where that distilled alcohol does not exceed, either in volume or percentage, 49% of the alcohol present in that beverage, with the remaining 51% resulting from a process of fermentation, falls under heading 2208 of that nomenclature.
61 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.