JUDGMENT OF 10. 6. 1975 —CASE 91/74 HAUPTZOLLAMT HAMBURG-ERICUS v HAMBURGER IMPORT-KOMPANIE

In Case 91/74 Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof (Federal Finance Court) for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, J. Mertens de Wilmars and A. J. Mackenzie Stuart (Presidents of Chambers), A. M. Donner (Rapporteur), R. Monaco, P. Pescatore, H. Kutscher, M. Sørensen and A. O'Keeffe, Judges, Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

The facts of the case, the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and procedure

On 16 June 1970, Hamburger Import-Kompanie submitted for customs clearance a consignment of 1248 cartons of concentrated orange juice with an added sugar content exceeding 30 % by weight and of a specific gravity of 1-33 or less at 15 o C. According to the declaration each carton contained twelve bottles, each with a net content of 895 grammes. The invoice price was stated to be DM 11-80 per carton, giving a book value of DM 109-89 per 100 kg of concentrated orange juice.

According to the nomenclature in Annex B to Regulation (EEC) No 455/69 of the Council of 11 March 1969 (Official Journal, Special Edition 1969 (I), p. 103), repeated in the Common Customs Tariff, in respect of the tariff classification for concentrated orange juice there is a limit in value, which at the time of importation was DM 109-80 (30 u.a.) per 100 kg. Fruit juice the value of which exceeded this amount fell under tariff heading 20.07 B II (a) 1 and could be imported without imposition of the levy. If the value of the fruit juice was lower than that limit, it was treated as a product coming under tariff heading 20.07 B II (b) 1 (aa) and thus subject to the levy.

On an examination of three bottles, the customs authorities found a net average weight of 930 grammes per bottle. They put this weight against the invoiced price of DM 11-80 per carton und thus obtained a value of DM 105-73 per 100 kg net weight, which caused them to classify the goods under tariff subheading 20.07 B II (b) 1 (aa), the products of which are subject to the levy. The amount of the levy to be paid was calculated at DM 3985-48.

In its action against this decision the plaintiff pointed out that it had only bought quantities of guaranteed content, being 895 grammes per bottle. The foreign supplier had exceeded the minimum content in order to guarantee a weight of 895 grammes and to compensate for differences in weight which might occur owing to the uneven thickness of glass in individual bottles and also to variations in temperature during bottling. The additional weight was not invoiced to him and it could not therefore be taken as the basis for determining the value for customs purposes. The decisive factor is not the quantity actually imported but only the quantity agreed to under the contract. For a net weight of 895 grammes per bottle the value of the goods exceeds 30 u.a. per 100 kg net weight and it is therefore a product coming under subheading 20.07 B II (a) 1, not subject to the levy.

The Finanzgericht Hamburg found in favour of the plaintiff on the ground that it was necessary to take into account not the value per 100 kg actual net weight of the goods but only the weight taken by the parties to the contract as the basis for determining the invoiced price, which is decisive for establishing the value for customs purposes.

Following an appeal on a point of law by the defendant, the main action is now pending before the Bundesfinanzhof, which by order of 23 October 1974 has suspended proceedings and referred to the Court of Justice of the European Communities under Article 177 of the EEC Treaty for a preliminary ruling on the following question:

For the purpose of classification under tariff subheading 20.07 B II (a) 1 or 20.07 B II (b) 1 (aa) of the Common Customs Tariff read in conjunction with the General Rules on the Common Customs Tariff, Section C, paragraphs 1 and 2 (b), in a case where the invoice price is adopted as the basis of valuation, is the determining factor the actual net weight of the imported goods or the minimum weight per unit agreed in the contract of purchase, where, under such a contract, it is customary in the trade to supply an additional quantity without further charge?

The order of the Bundesfinanzhof was received at the Court Registry on 11 December 1974.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted by the plaintiff in the main action and by the Commission of the European Communities.

After 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.

II — Written observations submitted to the Court

The plaintiff in the main action points out that the question put by the Bundesfinanzhof in fact contains two questions. The first concerns whether, for the purpose of classification of tariff headings 20.07 B II (a) 1 and 20.07 B II (b) 1 (aa) of the Common Customs Tariff read in conjunction with the General Rules on the Common Customs Tariff, Section C, paragraphs 1 and 2 (b), it is necessary to take as the basis the actual net weight in accordance with Section C, paragraph 2 (b), or the net weight calculated according to the provisions relating to the value for customs purposes in accordance with Section C, paragraph 1.

In order to interpret the criterion of tariff classification “of a value exceeding 30 u.a. per 100 kg net weight” one may only take into account Section C, paragraph 1, of those rules. In support of this argument, the plaintiff makes the following points:

Regulation (EEC) No 455/69 of the Council of 11 March 1969 (OJ, Special Edition 1969 (I), p. 103) is intended to introduce a uniform criterion for classification of certain tariff headings, based on value. According to the terms of the recitals in the preamble to this regulation, that objective (that is to say, here, the exemption from the levy of fruit juices having a high concentration of natural sugar) may be achieved to a large extent “by excluding juices with a value in excess of a given amount”.

The formulae used in the Common Customs Tariff also show the value as the decisive criterion of tariff classification whilst the net weight has merely a subsidiary function.

Section C, paragraph 2 (b), of the General Rules on the Common Customs Tariff only refers to the case in which the weight is the sole criterion for classification of certain tariff headings.

The question put by the Bundesfinanzhof also concerns whether — in the case of acceptance of the invoiced price as the basis of assessment — reference must be made to the actual net weight of the imported goods or the minimum weight per unit agreed upon in the contract of sale, where in the context of such an agreement an additional content free of charge is in conformity with trade usage. Finally, the question put by the Bundesfinanzhof relates to the interpretation of Article 4 (1) of the regulation on the valuation of goods for customs purposes (Regulation (EEC) No 803/68 of the Council of 27 June 1968, OJ, Special Edition 1968 (I), p. 170), in relation to the case in question.

The plaintiff maintains that Article 4 of that regulation must be interpreted in the context of the provision of principle, that is to say, the concept of the normal price in Article 1 of the said regulation. It alleges that this concept may be considered as a rule conforming to trade usage which guarantees an assessment of imported products according to the same criteria. It submits that the quantity of products to be valued is, as with other factors of assessment (price, time etc…), decisive for determining the value for customs purposes and that in principle it is necessary to determine the normal price — as provided for in Article 4 (1) of the regulation on the valuation of goods for customs purposes — by presuming that the sale turns on the quantity of the goods to be valued. The plaintiff also alleges that there is, however, a series of cases in which the quantity bought and the quantities to be valued are in fact different; in such cases the sole determining factor is whether the “corrections in weight” have altered the invoiced price and whether they conform to trade usage.

In the present case the sole interest of the plaintiff as an importer consists in the observance of a certain minimum weight for reasons arising from the provisions relating to foodstuffs, and that minimum weight is also the only factor in the determination of the price. The additional quantity had the effect of reducing or excluding the risk inherent in bottling.

For the purpose of classification of tariff headings 20.07 B II (a) 1 and 20.07 B II (b) 1 (aa) of the Common Customs Tariff, the provisions relating to the value for customs purposes must be applied in accordance with the General Rules on the Common Customs Tariff, Section C, paragraph 1.

The value for customs purposes may only relate to the quantity which has been made the subject-matter of the contract of sale to the extent to which, in this case, the additional quantity has had no influence on the price.

The Commission refers to the General Rules for interpreting the Common Customs Tariff and the particular rules for its application. According to Nos 1 and 5 of the General Rules for the interpretation of the nomenclature of the Common Customs Tariff, the terms of the subheadings constitute the basis of interpretation of the tariff.

The terms “of a value equal to 30 u.a. per 100 kg net weight” contain two criteria of classification — “weight or net weight” and “value” — which must be considered independently of each other. In order correctly to interpret these two concepts one must start from the necessity to have uniform criteria of assessment. Such a necessity is emphasized in the General Rules applicable both to nomenclature and to duties (Common Customs Tariff, Section I, General Rules, Section C, paragraphs 1 and 2) which provide that:

“Unless provided otherwise, the provisions relating to value for customs purposes shall be applied to determine, in addition to the value for the assessment of ad valorem customs duties, the values by reference to which the scope of certain headings or subheadings is defined.”; and that:

“The dutiable weight, in the case of goods chargeable by weight, and the weight by reference to which the scope of certain headings or subheadings is defined, shall be taken to be … in the case of a reference to “net weight” or simply to “weight” without qualification, the weight of the goods themselves without packing of any kind.”

According to the Commission, the expression “net weight” defined by this rule as being the “weight of the goods themselves” cannot mean anything other than the “actual weight of the imported goods”. This interpretation suggests itself from the purely linguistic point of view and is confirmed by the other cases of the application of that expression in the Common Customs Tariff. Above all, the objective of this provision, like the objective of the Common Customs Tariff itself, shows that these expressions do not refer to some hypothetical weight appearing in contracts or invoices but solely to the actual weight of imported goods. For the imposition of the levies the same criteria must be applied: the basis of calculation cannot be a quantity of goods agreed upon between the parties and expressed in the invoice but solely the quantity actually imported. In order to calculate the amount of the levy conversion must be made of the known amount of the levy on 100 kg of the product in question in relation to the actual weight of the consignment which is imported.

With regard to the calculation of the value for customs purposes, the Commission refers to the provisions of Regulation (EEC) No 803/68 of the Council (OJ, Special Edition 1968 (I), p. 170). According to Article 1 of that regulation, the value for customs purposes of the goods imported shall be taken to be the “normal price”, that is to say, the price which they would fetch at the time referred to on a sale in the open market between a buyer and a seller independent of each other. In so far as it fulfils the conditions which the normal price must meet, the “invoiced price” actually paid or to be paid by the purchaser may be accepted as the value for customs purposes (Article 9 of the regulation). In the case in particular in which individual conditions of payment and discounts have had an influence on the invoiced price, it must be determined whether that price may be accepted without adjustment as the value for customs purposes. According to Article 4 (1) of the said regulation, the value for customs purposes is to be determined “on the assumption that the sale is a sale of the quantity to be valued”. In fact, only the quantity actually imported may be subject to a customs duty or a levy. Consequently the basis cannot be a quantity arbitrarily agreed or invoiced but only the quantity actually imported, to be assessed and to be cleared through customs when determining the value for customs purposes. In addition, the abovementioned provision lays down that the value for customs purposes must be fixed for all the quantities of goods imported and that therefore additional quantities which are supplied by way of discount without any increase in price must also be taken into account. In the case of a difference between the quantity indicated in the invoice and the quantity actually imported, the question for examination is whether it is an additional delivery provided for by the contract, for which the invoiced price without alteration must be accepted, or an additional delivery not included in the original contract of sale or in the invoice and for which an additional normal price and an additional value for customs purposes must be determined.

In the case in question the total quantity imported, to be cleared through customs and to be valued is 930 grammes per bottle. Notwithstanding the price indicated in the invoice, which was calculated on the basis of a quantity of 895 grammes per bottle, the plaintiff received 930 grammes of concentrated orange juice per bottle without any increase in the price originally agreed upon. As the price therefore has to be considered as covering the whole of the consignment, the question for examination is whether that price paid may be accepted as the normal price or whether the free delivery presents such an unusual characteristic that the invoiced price should be adjusted. According to the Commission the additional delivery made may be considered as conforming to trade usage.

For the purpose of tariff subheadings 20.07 B II (a) 1 and 20.07 B II (b) 1 (aa) of the Common Customs Tariff, read together with the General Rules for the interpretation of the nomenclature of the Common Customs Tariff, Section C, paragraphs 1 and 2 (b), in the case of acceptance of the invoiced price as the basis of valuation the decisive factor is the actual net weight of the imported goods and not a minimum weight per unit agreed upon in the contract of sale, and this is so even if an additional delivery free of charge in the context of such an agreement conforms with trade usage.

The fact that a classification based on value has been used between these tariff subheadings in order to determine the levy to be imposed cannot alter the above conclusions.

The levy provided for by Regulation (EEC) No 865/68 of the Council of 28 June 1968 (OJ, Special Edition 1968 (I), p. 225) applies only to the added sugar content in processed products such as concentrated orange juice. Considering that products having a high concentration of natural sugar always have a value and price higher than products containing an inexpensive added sugar content, Regulation (EEC) No 455/69 established a distinction by fixing a precise limit of value, and exempted from the levy concentrated orange juice having a value exceeding 30 u.a. per 100 kg. There is nothing to show that for the calculation of that value it is not necessary to take the actual net weight of the imported goods, which is also the basis for the imposition of the levy.

III — Oral procedure

Hamburger Import-Kompanie, the plaintiff in the main action, represented by Dietrich Ehle, advocate of Cologne, and the Commission of the European Communities, represented by its Legal Adviser, Peter Kalbe, presented their oral observations at the hearing on 24 April 1975.

The Advocate-General delivered his opinion on 15 May 1975.

Law

1. By order of 23 October 1974, received at the Registry on 11 December 1974, the Bundesfinanzhof has asked the Court, under Article 177 of the EEC Treaty, to rule whether, for the purpose of classification under tariff subheadings 20.07 B II (a) 1 and 20.07 B II (b) 1 (aa) of the Common Customs Tariff, the determining factor is “in a case where the invoice price is adopted as the basis of valuation, the actual net weight of the imported goods or the minimum weight per unit agreed in the contract of purchase, where, under such a contract, it is customary in the trade to supply an additional quantity without further charge”.

2. Regulation (EEC) No 455/69 of the Council of 11 March 1969 (OJ, Special Edition 1969 (I), p. 103), considering that “the charging of a levy on fruit or vegetable juices falling within subheading No 20.07 B which have a high concentration of natural sugar should be avoided” and that “that objective may be achieved to a large extent by excluding.juices with a value in excess of a given amount from the levy”, introduced into the Common Customs Tariff a distinction between headings: and so that the agricultural levy in respect of added sugar content is due only in the second case.

“20.07 B II (a) 1: orange juice of a value exceeding 30 u.a. per 100 kg net weight”

“20.07 B II (b) 1 (aa): orange juice of a value of 30 u.a. or less per 100 kg net weight”,

3. It appears from the file that the firm concerned, having on 16 June 1970 submitted for customs clearance a consignment of 1248 cartons of concentrated orange juice each, according to the declaration, containing 12 bottles of a net weight of 895 grammes, at the price of DM 11-80 per carton, that is to say, a value of DM 109-89 per 100 kg, declared this consignment as coming under heading 20.07 B II (a) 1 because the limit of 30 u.a. was at that time DM 109-80 per 100 kg. However, the customs authorities established by a check that the bottles contained a net weight of about 930 grammes, considered that the value of the consignment ought to be calculated according to the actual net weight of the goods and not according to their declared net weight, classified the goods under heading 20.07 B II (b) 1 (aa) and required payment of a levy in respect of added sugar content of DM 3 985-48.

4. According to Section C, paragraph 1, of the General Rules on the Common Customs Tariff “Unless provided otherwise, the provisions relating to value for customs purposes shall be applied to determine, in addition to the value for the assessment of ad valorem customs duties, the values by reference to which the scope of certain headings or subheadings is defined”.

5. According to the importer of the consignment in dispute, once it is common ground, as in this case, that the price paid must be accepted as the value for customs purposes, in accordance with Article 9 of Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes, it follows that both the price and the net weight established by the invoice are to be taken into account as that price can only refer to that weight on a sale by weight of generic goods.

6. However, this reasoning takes insufficient account of the particular features of the question of interpretation put by the national court, which states that under the terms of the contract of sale “a minimum weight per unit” is agreed. This fact is confirmed moreover by the additional explanations put forward by the importer itself according to which the weight of 895 grammes per bottle was necessary for the goods to comply with requirements of German legislation relating to weights and measures. The case envisaged by the question is characterized therefore not by the fact that the total weight of the consignment in question should simply correspond to a certain weight per unit, in this case 895 grammes per bottle, but by the fact that each unit individually had to have a minimum net weight. When an excess of total weight of the goods is the foreseeable consequence of the obligation to guarantee the agreed minimum weight per unit, it cannot be considered as being the supply of an additional quantity “without further charge” by the vendor, in accordance with trade usage, but must be taken into consideration for the determination of the value of the goods ror customs purposes. This consequence is above all foreseeable when the invoiced price for the goods hardly exceeds the value limit in question.

7. The reply to be given must therefore be that in clearing through customs goods covered by headings 20.07 B II (a) 1 and 20.07 B II (b) 1 (aa) of the Common Customs Tariff, where the price paid or to be paid in respect of such goods is fixed taking into account a guarantee of a net minimum weight per unit sold, that price must relate to the actual net weight of the whole of the goods.

Costs

8. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. 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 Bundesfinanzhof, costs are a matter for that court.

On those grounds, THE COURT in answer to the question referred to it by the Bundesfinanzhof by order of 23 October 1974, hereby rules: