JUDGMENT OF 14. 12. 1972 — CASE 38/72 VAN DE POL v HAUPTZOLLAMT TRIER

In Case 38/72 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht Rheinland-Pfalz (Finance court of the Rhineland-Palatinate) for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore (Rapporteur), Presidents of Chambers, A. M. Donner, A. Trabucchi, J. Mertens de Wilmars and H. Kutscher, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following:

JUDGMENT

Issues of fact and of law

I — Facts and procedure

By Regulation No 19 of 4 April 1962 on the progressive establishment of a common organization of the market in cereals (JO No 30 of 20.4.1962, p. 933) the Council of the EEC among other things instituted a system of intra-Community levies corresponding to the difference between prices in force in the exporting Member State and those in force in the importing Member State so as to avoid causing possible disturbances in the market of a country where prices are higher, by reason of imports from a country where prices are lower.

In pursuance of Article 1 (d) and the Annex to Regulation No 19 this system applies to certain processed cereal products, in particular sweetened forage and other preparations of a kind used in animal feeding (additives etc.) containing cereals or products listed in the regulation (heading 23.07 B of the customs tariff applicable at the time).

According to Article 14(1) of Regulation No 19 the amount of the levies in respect of processed products is made up of a variable component and a fixed component.

The variable component of the levy applicable to processed products manufactured from the basic products set out in Article 1(a) of Regulation No 19 (in particular, common wheat, rye, barley, oats, maize, grain sorghum) corresponds to the incidence on their prime cost of the levies on the basic products entering into their manufacture.

The fixed component is determined in the light of the need to protect the processing industry.

By Regulation No 55 of 30 June 1962 on the system governing processed cereal products (JO 1962, p. 1583) the Council laid down, inter alia, the method of calculating the variable component of the levy and stipulated the amount of its fixed component.

As regards the variable component, Regulation No 55 provides that the incidence of the levies on basic products on the prime cost of the processed products shall be calculated on the basis of the levy applicable to the quantity of the basic product necessary for the manufacture of the processed product and, as a result, account is taken, on the one hand, of the quantity of the basic product necessary for the manufacture of a unit of the processed product and, on the other hand, of the amount of the levy applicable to a unit of the basic product.

Furthermore, in respect of processed products containing, besides cereals, substantial quantities of milk, sugar or molasses, a supplementary amount is provided equal to the levies, charges and duties levied on imports of those materials. Article 12(1) of Regulation No 55 states that in respect of the processed products covered by tariff heading 23.07 B, the variable component of the levy, applicable to 100 kgs of processed product, shall be based on the sum of the levies applicable, first, to 30 kgs of barley, secondly, to 50 kgs of maize, and finally to 20 kgs of sorghum, and shall be equivalent to 17, 51, 85 or 100 % respectively of the aforementioned sum depending on the starch content of the processed product.

According to Article 12(2) of Regulation No 55, if 100 kgs of processed product contain either more than 5 kgs of milk, in powdered or other form, or more than 15 kgs of molasses or sugar, an additional amount shall be added to the amount of the variable component of the levy equal to the amount of the levies, charges and duties of all kinds imposed on importation into each Member State of the quantity of milk, in powdered or other form, molasses or sugar exceeding 5 and 15 kgs respectively. The fixed component of the levy on processed cereal products is calculated at a flat rate on the basis of the most representative prices and is of a uniform amount for all the Member States.

As provided by Article of Regulation No 55 this fixed component applicable to 100 kgs of processed product covered by tariff heading 23.07 B is equal to 1.40, 1.10, 0.85 and 0.55 u.a. respectively according to the starch content of the product.

Regulation No 166/64 of the Council of 30 October 1964 on the system applicable to certain categories of compound feeding-stuffs (JO 1964, p. 2747) has introduced a number of simplifications to the system of levies applicable to animal food preparations under heading 23.07 of the Common Customs Tariff as laid down by Regulation No 55.

As for the products stipulated in Article 1(a) of Regulation No 19, in particular common wheat, Article 2(1) of the said regulation provides that the amount of the intra-Community levy shall be equal to the difference between the free-at-frontier price of the product from the exporting Member State and the threshold price in the importing Member State, this difference being reduced by a fixed amount.

Between 11 May and 21 June 1965 the undertaking Arend van de Poll KG, having its registered office in Cologne, imported into the Federal Republic 14 consignments of a product from France which it declared at the customs office at Trier-Westbahnhof for the purposes of customs clearance, as being ‘other preparations of a kind used in animal feeding containing more than 50 % by weight of starch and containing no milk products’ (subheading 23.07 B, I (d)(1) of the Customs Tariff, 1965).

Attached to the above declarations were the suppliers' invoices indicating that the product was made up of about 87 % common wheat and 3 % cod liver oil, to which were added, in seven cases, 10 % barley, in one case, 5 % barley and 5 % oats and, in another case, 7 % barley and 3 % oats.

In five cases the documents did not mention the composition of the product.

Alter clearing the product for customs purposes on the basis of the importer's declarations and imposing the rate of levy applicable to products under tariff heading 23.07 B, I(d)(1), the customs office at Trier-Westbahnhof took samples from two of the consignments and had them examined by the ‘Zolltechnische Pr fungs- und Lehranstalt’ (Customs technical inspection and training establishment), Frankfurt am Main.

The ‘Zolltechnische Prüfungs- und Lehranstalt’ reached the conclusion that the samples examined contained 92 and 96 % common wheat and 8 and 4 % barley, respectively.

It also found 0.70 and 0.87 % respectively of cod liver oil.

It classified the product as a simple mixture of cereal grains coming under tariff heading 10.01 of the customs tariff (wheat and meslin).

On the oasis of that expert report, the customs office, by notification of 7 October 1965, corrected by notification of 1 December 1965, changed the tariff classification of the product and in calculating the levy applied tariff heading 10.01 B of the customs tariff then in force.

As a result it required the undertaking Arend van de Poll to pay by way of levy an additional sum of DM 5433.70.

On 4 November 1965 the undertaking Arend van de Poll submitted a complaint against the notification altering the duty to be paid.

The complaint was dismissed by decision of 20 April 1967.

On 19 May 1967 Arend van de Poll brought an appeal against that decision before the Finanzgericht Rheinland-Pfalz.

In the course of the hearing before that court the German customs authorities admitted that simple mixtures of cereals, whether or not they contained cod liver oil, could be considered as preparations used for animal feeding within the meaning of tariff heading 23.07.

It is however necessary that the proportions of materials in the mixture should correspond to the use for which it is intended, which is not the case with the products in dispute.

Furthermore, the addition of cod liver oil or fish oil to such a mixture would render it a ‘preparation of a kind used in animal feeding’ only when the additive is included as an active ingredient of the forage.

That is only the case when there is at least 1 % of cod liver oil or fish oil.

The products imported by Arend van de Poll should therefore be classified in accordance with the fact that their main component is wheat.

For its part, Arend van de Poll claimed that a mixture of cereals to which cod liver oil or fish oil has been added can no longer be considered a simple mixture of cereal grains falling within Chapter 10 of the Customs Tariff.

For such a mixture to be classified under the heading covering ‘preparations of a kind used in animal feeding’ it is not necessary that the additive should be an ingredient in the fodder and constitute not less than 1 % of it by weight.

By order of 3 May 1972 the third chamber of the Finanzgericht Rheinland-Pfalz decided to stay the proceedings until the Court of Justice has given a preliminary ruling on the following questions:

1) Are the Annex to Regulation No 19/62 of the Council concerning tariff heading 23.07 and Article 12 of Regulation No 55/62 of the Council to be interpreted as meaning that a mixture of common wheat and barley or of common wheat, barley, oats and maize is sufficient to constitute an animal food preparation within the meaning of those provisions?

2) If the answer is in the affirmative, is it necessary that the different cereals used in the composition of the product should be in a certain (minimum) proportion; if so, what is that proportion?

3) If the answer to the first question is in the negative: must the Annex to Regulation No 19/62 and Article 12 of Regulation No 55/62 be interpreted as meaning that for mixtures of cereals to constitute animal food ‘preparations’ or for it to be possible to consider feed as having been ‘prepared’ for animals it is necessary that substances other than cereals which are themselves used in the composition of forage should have been added to those mixtures of cereals?

4) If this is so, can the addition of 0.87 or 0.76 % of cod liver oil or fish oil be considered sufficient for this purpose?

5) If the reply to question (3) is in the negative, can one also speak of an ‘animal food preparation’ or of a ‘preparation of a kind used in animal feeding’ when a denaturing agent has been added? Can cod liver oil or fish oil be regarded as denaturing agents within the meaning of Regulation No 178/64?

6) If the answer is in the affirmative, can there, in general, only be denaturing by this means when the denaturing agents have been added in a certain proportion or is it enough that after addition of them the goods should be made unfit for human consumption?

7) If the denaturing agents mentioned have to be added in a certain proportion, does it suffice that they have been added in the proportions in question to the common wheat contained in a mixture of common wheat, barley and possibly also oats?

8) If the replies to questions (6) and (7) are in the affirmative, does the existence of slightly smaller proportions have an effect on the classification? If so, within what limits?

The order of the Finanzgericht Rheinland-Pfalz was filed at the Registry of the Court on 28 June 1972.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 18 September 1972 by the Commission of the European Communities.

Alter hearing the report of the Judge-Rapporteur and the views of the Advocate-General, the Court decided to open the oral procedure without any preparatory inquiry.

The commission of the European Communities, represented by its Legal Adviser, Dieter Oldekop, presented its oral observations and replied to questions put by the Judge-Rapporteur at the hearing on 7 November 1972.

The Advocate-General delivered his opinion at the hearing on 6 December 1972.

II — Observations submitted to the Court

The written and oral observations submitted by the Commission of the Communities may be summarized as follows:

The questions put concern essentially the interpretation of tariff heading 23.07 and the determination of the criteria which distinguish it from the headings of Chapter 10 (cereals) of the Common Customs Tariff. The judgment delivered by the Court of Justice on 23 March 1972 in Case 36/71 (Günter Henck v Hauptzollamt Emden, reference for a preliminary ruling by the Finanzgericht Hamburg, [1972] ECR 187) already goes a considerable way towards providing the replies to these questions.

Questions 1 and 2

a) Its very terms indicate that a first condition for the classification of a product under tariff heading 23.07 is that it should be a ‘preparation’. It emerges from the case-law of the Court that ‘preparation’ means either the processing of a product or its mixture with other products. Mixtures of different varieties of cereals can therefore satisfy this condition.

b) The second condition is that this preparation should be intended solely for animal feeding. An Explanatory Note to me Brussels Nomenclature excludes from heading 23.07‘preparations which, when account is taken, in particular, of the nature, purity and proportions of the ingredients … can be used indifferently for feeding animals or as human food’. Whether or not a preparation is covered by heading 23.07 therefore depends on a positive and a negative condition: the preparation should be suitable for the feeding of animals but must not also be capable of human consumption.

c) The condition of suitability for animal feed is satisfied by a large number o: products which, by reason both of their consistency and their composition, are so diverse that it seems impossible to find a general definition for them on the basis of their ingredients. From the Explanatory Notes to the Brussels Nomenclature, to which reference must be made in the absence of provisions concerning interpretation enacted on the subject by the Community, it can be deduced that the inclusion of a preparation under heading 23.07 presupposes not only that it is capable of use for the feeding of animals but also that the product concerned, because of its composition or its function, is specifically suitable for the feeding of animals and therefore used ordinarily for that purpose. This follows from the very terms of tariff heading 23.07 (‘animal food preparations; other preparations of a kind used in animal feeding’), which signifies that it is limited to preparations ordinarily used in the feeding of animals. This is confirmed by the previous version of the Explanatory Notes, which stated in particular that ‘Finally, other feeding-stuffs may be obtained from other animal or vegetable substances … the characteristic for inclusion here lies in the fact that they must be preparations used principally for the feeding of animals’. The present version of the Explanatory Notes (C, paragraph (3)) contains a similar restriction: ‘This heading also includes preparations made up of several inorganic substances … in so far as they are of a kind used in the feeding of animals’. Finally, it follows from the Explanatory Notes as a whole, in particular from the distinction therein between ‘complete feed’, ‘supplementary feed’ and preparations intended ‘for use in making complete or supplementary feeds’, that for a product to fall within heading 23.07 it must be ascertained whether the preparation in question can ordinarily be used for the feeding of cattle.

d) As regards the negative condition for classification of a product as an animal food preparation — unsuitability for human consumption — note C of the Explanatory Notes to the Brussels Nomenclature indicates that to ascertain whether a product is suitable both for the feeding of animals and human consumption account must in particular be taken of its nature, the purity and proportions of the different ingredients, the hygiene requirements complied with during manufacture and the indications given on the packaging or any other information concerning its use.

e) Since the dispute in the main action concerns mixtures of cereals, it is important to note that the Explanatory Notes exclude from heading 23.07 in particular ‘simple mixtures of cereal grains (Chapter 10), of cereal flours …’. However, the Notes do not make it clear what is meant by ‘simple’ mixtures of cereal grains. Cereal mixtures which, because of their composition, are typically suitable for the feeding of animals and which cannot at the same time be used for human consumption must be regarded as falling within heading 23.07. In the absence of one of those two conditions they may not be classified as animal food preparations. This is the only interpretation which permits of a clear and logical distinction between heading 23.07 and the products falling within Chapter 10 (cereals). Thus the mere fact that a mixture of cereals, through denaturing or damage, has become unfit for human consumption is insufficient to exclude it from Chapter 10 of the Common Customs Tariff and so bring it within heading 23.07. This classification is possible only if by reason of the proportions of the different components or because of additives, the mixture possesses, by comparison with ‘neutral’ cereal mixtures, a specific quality, namely typical suitability for animal feeding. This interpretation is evident in Regulation No 139 of the Council of 14 November 1962 relating to the levies applicable to cereal mixtures (JO p. 2729). It is consistent with the desire to limit the application of provisions relating to levies on processed agricultural products to those products which have actually undergone processing and which on this basis justify the application of a special system. This is why Regulation No 55, for the purpose of calculating the variable component of the levy, lays down a standard type of animal food preparation. The restrictive interpretation of tariff heading 23.07 also corresponds to the structure of the market in animal feeding products, on which there are a certain number of standard preparations.

f) As regards mixtures of common wheat and barley or of those two cereals with oats and maize, it must be admitted that a mixture made up of maize and barley — which are among the varieties of cereals most frequently used as basic materials in animal foodstuffs — constitutes a preparation ordinarily used in animal feeding, even if at the same time it contains common wheat and oats. If the mixture contains no other material it is generally what is called in the Explanatory Notes a ‘premix’ which, after importation, is processed in an animal feed factory by the addition of other forage materials into a complete feed or a supplementary feed appropriate from the point of view of food hygiene.

g) Because of the many possible uses as animal feed and the methods of preparation, it is not possible to give a general reply to the question asking what minimum proportion of the various ingredients must be present in the mixture before it can be said to be a preparation suitable for feeding animals. A reply can only be given on an individual basis, having regard to the circumstances. In any case, such a reply could not be given under the Article 177 procedure. That is a question of the application of Community law which is a matter for the national courts. Speaking generally, it can only be said that barley and maize are typical forage cereals, but that at a similar level of quality common wheat is typically of bread-making quality. A high proportion of common wheat in a mixture of cereals might therefore give rise to the assumption that it is not a preparation which is typically suitable for the feeding of animals. Nevertheless, it must be remembered that common wheat, barley, oats and maize are suitable not only as forage for animals, but also for human consumption. With regard to mixtures based on those varieties of cereal, their suitability or unsuitability for human consumption, which is decisive for their classification under heading 23.07, cannot be determined in a general way. It must be determined case by case, taking account in particular of the criteria set out in note C of the present Explanatory Notes for heading 23.07. It is however to be noted that in practice, in the fodder trade, mixtures containing more than 50 % of common wheat do not exist. In determining whether products fall under tariff heading 23.07 it must also be ensured that the rules governing the system of levies on cereals are not evaded, for example by the separation of the component parts of a cereal mixture imported as an animal food preparation or by subsequent processing of the mixture into a food product.

Question 3

It follows from the observations submitted with regard to the first two questions that if a mixture of cereals is not already, by virtue of the respective proportions of its various components, typically and exclusively suitable as forage for animals, as required for its classification under heading 23.07, it can acquire such suitability only if other materials are added to it which themselves constitute specific forage materials or which render the mixture unfit for human consumption.

Question 4

The addition of cod liver oil or fish oil can have two functions: to denature cereals or to increase the nutritive value of the mixture.

As regards denaturing, it should be noted that according to the French provisions in force at the time when the disputed imports were made, the denaturing premium was paid when at least 0.5 % of cod liver oil or fish oil was added to the wheat; this percentage was lower when oats were added to the wheat. However, such denaturing, by itself, is not sufficient to bring the mixture within heading 23.07.

Since they contain many nutrients and vitamins, cod liver oil and fish oil can constitute forage materials. However, by reason of their price and their effect on the taste of eggs and the flesh of poultry, in practice they are rarely used for that purpose. In any case, the addition of at least 1.5 to 2 % would seem necessary before a nutritive effect could be obtained.

It is almost impossible to indicate a minimum amount, valid in all cases, for the proportion of cod liver oil or fish oil required to make a mixture of cereals typically suitable as forage. The determination of such a minimum amount, in an individual case, account being taken in particular of the composition of the mixture and its specific use, is a matter for the national court to decide.

Questions 5 and 6

A preparation which is typically suitable as forage cannot be covered by heading 23.07 if at the same time it is fit for human consumption. It becomes an animal food preparation within the meaning of tariff heading 23.07 if a denaturing agent is added to it which renders it unfit for human consumption. It follows that the percentage of denaturing agent added is relevant only in that it must be sufficiently high to render the mixture unfit for human

As to whether cod liver oil or fish oil constitute denaturing agents within the meaning of Regulation No 178/64 of the Commission of 12 November 1964 on the amount of and conditions governing premiums on denaturing of wheat and rye (JO p. 2955) it must be observed that this regulation is not concerned with classification and that, furthermore, it contains no definition of denaturing agents. It merely states that the denaturing must ensure ‘that the denatured wheat or rye can no longer be used for human consumption’. The question whether cod liver oil or fish oil are means of denaturing ensuring that objective is primarily a matter, having regard to the legal position of the disputed imports at the relevant date, for the national court. It is therefore for the national court to reply to it.

Questions 7 and 8

The observations submitted in connexion with questions 5 and 6 make these questions irrelevant.

Grounds of judgment

1. By order of 3 May 1972, registered at the Court of 28 June 1972, the Finanzgericht Rheinland-Pfalz (Finance Court of the Rhineland-Palatinate) referred, in pursuance of Article 177 of the EEC Treaty, a number of questions on the interpretation of heading 23.07 of the Common Customs Tariff — in the version in force at the time when the event occurred — referred to in Article 1 (d) of and the Annex to Regulation No 19 of the Council of 4 April 1962 on the progressive establishment of a common organization of the market in cereals (JO 1962, p. 933) and Article 12 of Regulation No 55 of the Council of 30 June 1962 on the system governing processed cereal products (JO 1962, p. 1583). It is clear from the order making the reference that these questions were put in the context of a dispute concerning the classification, with a view to the application of intra-Community levies, of a product composed mainly of common wheat, mixed with barley and oats and containing a small additional amount of cod liver oil.

2. According to the plaintiff in the main action this product falls under heading 23.07 (‘preparations of a kind used in animal feeding’), whereas the customs administration, the defendant in the main action, claims that it should be classified under heading 10.01 of the Customs Tariff (‘wheat and meslin’).

3. The essential purpose of the questions put to the Court is to ascertain: Whether, provided that the correct proportions are used, such a mixture of itself constitutes a preparation of a kind used in animal feeding, within the meaning of heading 23.07 (questions 1 and 2); if not Whether such a ‘preparation’ is obtained when the product contains, in addition to a mixture of cereals, other ingredients which may be considered as animal food materials (questions 3 and 4); if not Whether a mixture of cereals such as that in question in the present dispute may be considered to be a preparation of a kind used in animal feeding where a denaturing agent has been added in sufficient quantity, either to the mixture as a whole or to its principal ingredient, and if cod liver oil or fish oil can be used for this purpose (questions 5 and 8).

4. The terms of heading 23.07, with which this dispute is concerned, read as follows in the Annex to Regulation No 19: This heading, in the context of the Customs Tariff, constitutes a specific category, relating not to random combinations of cereals, with or without the addition of other substances, but to forage produced for use in animal feeding.

‘Animal food preparations including sweetened forage; other preparations used in animal feeding (additives etc.):

B) Containing cereals or containing products covered by the present Regulation’.

5. This explanation is supported by the Explanatory Notes to the Brussels Nomenclature relating to heading 23.07, in which it is stated that ‘This heading excludes: … (b) Simple mixtures of cereal grains … (c) Preparations which, when account is taken, in particular, of the nature, purity and proportions of the components, the hygiene requirements complied with during manufacture and, where appropriate, the indications given on the packaging or any other information concerning their use, can be used indifferently for feeding animals or as human food’. These Notes permit two distinct criteria to be deduced: first, from the particular use to which the product is to be put as forage and, secondly, from the impossibility of using the same product for human consumption.

6. In particular, it appears from the above that the addition of a denaturing agent to a mixture of cereals does not bring the product within the classification of heading 23.07 if, on the other hand, the product is not capable of being used specifically as forage for cattle.

7. Practical considerations arising in individual cases from the application of criteria laid down by the Customs Tariff are a matter for the national courts. That is true, in fact, of all matters concerning the composition of cereal mixtures and the proportions of different cereals used, the nature and proportion of other additional nutrients and the nature of and method of applying the products used to render foods unfit for human consumption.

8. Accordingly, in reply to the questions referred, heading 23.07 must be interpreted as meaning that it is concerned exclusively with cereal-based animal food preparations which are specifically intended for use as forage, provided that they are not, at the same time, fit for human consumption.

Costs

9. The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable, and as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the Finanzgericht Rheinland-Pfalz, costs are a matter for that court. On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 177; Having regard to Regulation No 19 of the Council of 4 April 1962 on the progressive establishment of a common organization of the market in cereals and to Regulation No 55 of the Council of 30 June 1962 on the system governing processed cereal products; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the questions referred to it by the Finanzgericht Rheinland-Pfalz by order of 3 May 1972, hereby rules: