JUDGMENT OF 16. 7. 1981 — CASE 159/80 WÜNSCHE v BALM

In Case 159/80, REFERENCE to the Court under Article 177 of the EEC Treaty by the Hessisches Finanzgericht [Finance Court, Hesse] for a preliminary ruling in the action pending before that court between

THE COURT (First Chamber) composed of: T. Koopmans, President of Chamber, A. O'Keeffe and G. Bosco, Judges, Advocate General: F. Capotorti Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

The order making the reference to the Court, the course of 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 written procedure

1. The plaintiff in the main action (hereinafter referred to as “Wünsche”) applied for and obtained between 21 June and 18 August 1965 authorization for four refunds in respect of “sorghum flakes with an ash-content of 2 % or less by weight on the dry product”. The authorized refunds were granted in the form of licences for the levy-free importation of 180 kg of sorghum for every 100 kg of sorghum flakes exported. Within the periods allowed it, Wünsche exported several shipments of a product which it described as “sorghum flakes with an ash-content of 2% or less by weight on the dry product”. Expert reports submitted by it certified that the goods were, “according to the normal requirements of this sector of the trade concerning type, condition and composition, a product customary in the trade, namely sorghum flakes”. The Finanzgericht established that the goods fulfilled the required conditions as regards the ash-content of 2% or less by weight on the dry product; moreover, they had been steam-treated and rolled, causing the kernels to burst into star shapes. The Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets, hereinafter referred to as “the Federal Office”], the defendant in the main action, at first granted the application for a refund. However, the Zolltechnische Prüfungs- und Lehranstalt [Customs Laboratory and Training College], Hamburg, found inter alia, that in individual export consignments the brownish outer husk of the sorghum kernels was still wholly intact and no traces of polishing could be found and that the goods were therefore not hulled, and the defendant therefore decided on 8 December 1976 to revoke its earlier decision granting the refund, stating as the reason that the product exported was not flakes, but merely rolled grains. On that ground it accorded a refund on the basis of a processing coefficient of 102/100 (rolled grains) instead of 180/100 (flakes). Wünsche appealed against that decision to the Hessisches Finanzgericht [Finance Court, Hesse]. It maintained that for a processed cereal-based product to be considered flaked it was sufficient at the time if the kernels had been steamed and rolled out. In addition to that, the goods in question had undergone the first stages of a process for stripping the kernels of their outer cover. They thus fulfilled the only criterion governing the grant of the refund at the required rate, namely the ash-content.

2. The rules applicable in this matter may be summarized as follows. The annex to Regulation No 19 of the Council of 4 April 1962 on the progressive establishment of a common organization of the markets in cereals (Journal Officiel 1962, p. 933) contains a reference, taken from tariff heading 11.02 of the Common Customs Tariff, to “grains mondés, perlés, concassés, aplatis (y compris les flocons), AIII. d'autres céréales (b) autres”. Sorghum falls under “Other cereals”.

Article 5 of Regulation No 141/64 of the Council of 21 October 1964 on the rules applying to processed products derived from rice and other cereals (Journal Officiel 1964, p. 2666) employs the descriptions of goods in Regulation No 19 and introduces an additional distinction based on the ash-content, as follows :

“Article 5 (1) In respect of certain products under Common Customs Tariff No ex 11.02, namely, Groats, meal: worked cereal grains, pearled, crushed, rolled (including flakes), except peeled, glazed, polished or broken rice; germ of cereals, including flour thereof: ex A. roats, meal; worked cereal grains, pearled, crushed, rolled (including flakes) : ex I. of wheat (except groats and meal) II. of rye III. of other cereals: (a) barley and oat flakes (b) other the variable component shall be equal to the average levy chargeable on the following quantities of basic products : A. For groats and meal : (a) ... (b) ... (c) ... (d) ... B. For flakes: (a) of barley or oats : ... (b) of other cereals : 180 kg where the ash-content is 2% or less by weight on the dry product; (c) 102 kg in other cases; C. For hulled cereals : ... D. For pearled cereals : ... E. For cereals crushed or rolled but not further prepared and for clipped oats: 102 kg”.

Article 5 of Regulation No 141/64 concerns the calculation of the levy. Articles 14 and 15 give specific form to the power given to Member States in Articles 19 and 20 of Regulation No 19 to grant refunds.

3. Considering that the dispute raised questions concerning the interpretation of Community law the Hessisches Finanzgericht referred the following questions to the Court by an order of 25 June 1980 for a preliminary ruling:

“(a) Do ‘flakes of sorghum’ [Flocken von Sorghum] (Article 1, Point (d), of Regulation (EEC) No 19 in conjunction with the annex thereto) of the type referred to in Article 5 (1) Β (b) of Regulation (EEC) No 141/64 ([having an ash-content of] 2% or less by weight on the dry product) differ from sorghum flakes [Sorghumflocken] of the type referred to in Article 5 (1) B (c) of Regulation (EEC) No 141/64 merely by their ash-content or should flaked sorghum [having an ash content of] 2% or less by weight also be hulled? (b) In the context of Question (a) was it possible for the Explanatory Notes to the Customs Cooperation Council Nomenclature, which made the character of ‘flaked’ dependent on hulling (Explanatory Note No 62 to tariff heading No 11.02), to be used as an aid to interpretation in relation to exports in the year 1965? (c) Did the term ‘hulling’ as used in Note 2 to tariff heading No 11.02 mean, even in relation to sorghum which is a so-called naked cereal [Nacktgetreide] that the pericarp including the aleuron cells should have been removed in such a way that the floury kernel was ‘generali’visible? Did ‘generally’ mean: for the most part (more than 50%) or almost entirely (more than 75%)? (d) (By way of a complement to the above or — if Questions (a) to (c) are answered in the negative — alone). In interpreting the concept of ‘flakes’ should recourse be had to the penultimate paragraph in the preambles to Regulation (EEC) No 55 and Regulation (EEC) No 141/64, the first paragraph of Article 2 of Regulation (EEC) No 92 and the first paragraph of Article 15 of Regulation (EEC) No 141/64, according to which refunds for processed products were to be calculated on the basis of the levy applicable in respect of the basic products required for their manufacture?”

The order making the reference was lodged at the Court Registry on 9 July 1980.

In the grounds of the order making the reference the Finanzgericht relied on the following considerations :

If as the basis of its decision in respect of exports in 1965 the court making the reference must follow the judgment of the Court of Justice of the European Communities of 8 April 1976 in Case 106/75, the complaint must be dismissed: The reason is that in that decision reference was made by the Court to the Explanatory Notes to the Customs Cooperation Council Nomenclature in relation to flaked cereal in general, considering that the notes constituted “an aid to interpretation” of the Common Customs Tariff; the reference concerned not only Explanatory Note (6) (the requirement that flaked grain must be made from hulled grains), but also Explanatory Note (3) (on the question when grain is to be considered to have been hulled). The last question was answered to the effect that after hulling “generally the floury kernel” should be “visible”. If the adverb “generally” is to be interpreted as meaning that, at least in the case of “naked” cereal such as wheat or sorghum, in order for it to be considered as hulled the pericarp must for the most part (more than 50%), if not almost entirely (more than 75%), have been removed, in such a way that the floury kernel beneath the aleuron cells becomes visible, the goods in question would have to be considered, according to the statements made by the manufacturer and the experts' reports, as not hulled, and therefore not composed of “flakes”.

The court was in doubt as to whether — at least as regards the year in which the goods were exported (1965) — the use solely of the Explanatory Notes to the Customs Cooperation Council Nomenclature with regard to the EEC regulations and the national provisions adopted on the basis of them, which were applicable at the time with respect to the granting of refunds, could still be regarded as using them as “an aid to interpretation”. In the opinion of the court there can be no question of an aid to interpretation unless the wording of the provisions which apply is open to different constructions; that is not the case where an attempt is being made to restrict the wording of such provisions. According to the General Rules for the Interpretation of the Common Customs Tariff Nomenclature, tariff headings or subheadings must be construed specifically in accordance with, in the first place, the terms of the headings, then the Section or Chapter Notes and, finally, according to the General Rules themselves. If, therefore, Article 1 (d) and Article 20 (2) of Regulation No 19 of the Council in conjunction with the annex to that regulation relied on the Tariff, in this case subheading 11.02, for the grant of refunds as well, whilst for the levy (and mutatis mutandis the refund) Article 5 of Regulation No 141/64 of the Council merely retained for the concept of flaked grain of subheading 11.02 a distinction based on whether there was more or less ash in the dry product, then there was no longer any “heading which provides the most specific description” within the meaning of General Rule 3 (a) for the Interpretation of the Nomenclature of the Common Customs Tariff. In any case even the ordinary meaning of the words shows that “flakes” do not always have to be produced from hulled cereal. Were it otherwise, it would not have been sufficient for Regulation No 141/64 to refer to the ash-content alone as the criterion; the draftsmen ought to have added (flakes) “of hulled grain”. The fact that the requirement of hulling in the case of sorghum could not be established merely by limiting the ash-content may be seen in the experts' report, according to which unhulled sorghum has an ash-content of between 1.48% and 2.77% on the dry weight, giving an average of 1.94%. According to that report the hulling reduces the ash-content by only 0.03%. If, in addition, 25% of the germ is removed from the grain the ash-content would be reduced by 0.27%. Still according to the report, goods with a high ash-content, properly hulled, may have more than 2% ash-content by weight on the dry product, whereas goods of good or even average quality which have not been hulled may have an ash-content lower than that percentage.

Even the trade definition does not make it possible to establish a requirement that flaked cereal be made with hulled grain. It does not even allow a distinction to be made between edible flakes and flakes for animal feed. The fact is that even highly nutritious wheat flakes or oat flakes destined for human consumption are manufactured from the whole grain, only the fine hairs adhering to the pericarp being removed in the case of oats. Moreover, according to the experts' report all that is necessary to produce “flakes” is that the grains have been subjected to heat-treatment and rolled out. The Explanatory Notes of the Customs Cooperation Council, however, consider hulling to be necessary, heat-treatment being merely regarded as harmless. In view of the prevailing opinion in the national trade the German court considered that it was bound to look to the Explanatory Notes in case they reflected the trade definition accepted in the other EEC Member States. The fact is that the relevant trade circles within the Federal Republic of Germany were not aware of the Notes as such; in 1965, they existed only in English and French.

4. Written observations were submitted in accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC by Wünsche, the plaintiff in the main action, represented by F. Modest of the Hamburg Bar, and by the Federal Office, represented by A. Stockburger of the Frankfurt Bar. On 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. By order of 17 December 1980 the Court, pursuant to Article 95 (1) and (2) of the Rules of Procedure, decided to assign the case to the First Chamber.

II — Summary of the observations submitted to the Court

Wünsche commences with an explanation of the physical structure of cereals: each variety has an outer skin (“hull” or “bract”; “Hülse” or “Spelze” in German) and an inner skin known as the “pericarp”. Unlike the outer skin (hereinafter referred to as “the hull”), the pericarp contains important nutritive substances which lie in the layer of aleuron cells. For that reason it would be pointless to remove the nutritious parts of the grain and then make flakes out of what remains. Sorghum belongs to the category of cereals known as “naked” cereals, which may be hulled merely by threshing or winnowing.

Wünsche refers to two experts' reports which show that sorghum flakes are made from unhulled sorghum and that when sorghum is processed into flakes the effect is not the same as on other cereals.

It emphasizes that only in the case of barley does a small part of the inner skin need to be removed by hulling when the complete removal of the hulls is necessary, owing to the fact that the hulls adhere very firmly to barley grains. For other types of cereal the hulls may be removed by winnowing or threshing.

An analysis of the rules which apply shows that, with regard to both the levy and the refund, flakes of barley and of oats are treated differently from each other, and from flakes obtained from other cereals, in that the rate of levy and of refund for those two cereals is higher than that for other cereals. The Council and Commission thus took into account the differing characteristics of the various types of cereals when they drew up the rules in question.

It may also be seen from those rules that as far as the authors of the regulations are concerned, flakes of barley may have an ash-content greater than 2%. However, the experts' report reveals that, subject to a few exceptions, flakes with an ash-content higher than 2% are made from cereals of which only the hull has been stripped or removed by hulling. In order to determine whether a type of flake falls within the sphere of application of the rules it is therefore not necessary to know whether parts of the pericarp have been removed or not.

Note (3) in the Explanatory Notes to the Customs Cooperation Council Nomenclature on tariff subheading 11.02 refers to two distinct products made from cereals:

(a) in the first place, grains which have had their pericarp wholly or partially removed by hulling or some other process, and (b) in the second place, grains — principally barley of the bracteiferous variety (see Explanatory Note to subheading 10.03) — or which the hull or bract which remains firmly attached to the grain even after threshing or winnowing has been removed.

The first case concerns grains which have had not only their bract but also, wholly or partially, their pericarp removed. In the second example, however, the Explanatory Notes deal with grains which have been stripped of bracts which even after threshing or winnowing remain tightly attached to the grain. Here the Explanatory Notes draw attention to the Explanatory Note on tariff subheading 10.03, which states that barley is excluded from that tariff subheading when the hulls have been removed by a milling process which sometimes also removes part of the pericarp. This latter state thus concerns only barley and oats, which are marketed as so-called “bracteiferous” cereals and which do not fall under tariff subheadings 10.03 and 10.04 unless they have retained their bracts.

Whilst the second part of the sentence states that when the grain has been hulled the floury kernel is then generally visible, it refers subsequently only to the product processed from cereals referred to under (a), that is to say, grains which have had their pericarp wholly or partially removed by hulling.

Wünsche is of the opinion that that portion of the sentence is ambiguous and, moreover, partly inaccurate. If only the husks or hulls of the grains have been removed by hulling or another process, the floury kernel is not visible. If the pericarp has been wholly or partially removed from the grain the floury kernel is wholly or partially visible and not “generally” visible, even if only part of the pericarp has been removed.

Explanatory Note (6) to the Customs Cooperation Council Nomenclature on subheading 11.02 deals with flaked barley, that is to say, flakes of typical cereals commonly described as “bracteiferous”, which are marketed as such. The Notes state [in the French version] that they “retain part of the husk”. In view of the fact that the Explanatory Notes mention principally flakes of barley and of oats, Wünsche considers that it must be concluded that the term “husk” [pellicule] is used to mean both the outer skin (the hull or bract) and the inner skin (the pericarp).

From that it concludes that the judgment of 8 April 1976 (Case 106/75 Merkur v Hauptzollamt Hamburg-Jonas [1976] ECR 531) must be so understood that paragraph 5 thereof — which states that barley grains subjected to hulling lose part of their husk — must mean that the grains lose to a large extent, that is to say most of, their husk or bract.

In conclusion it suggests that the Court reply as follows to the first question submitted :

“The requirements as to hulling applicable in the case of barley flakes are not necessary in the case of sorghum flakes. It suffices for the outer skin (the husks and bracts) to have been largely removed. The requirement that the pericarp be partially removed applies only where that is necessary in order to ensure the desired ash-content of less than 2%”.

As to the second question, Wünsche refers to the judgments of the Court of 5 March 1980 (Case 265/80 Ferwerda v Produktschap voor Vee en Vlees [1980] ECR 617) and 27 March 1980 (Joined Cases 66, 127 and 128/80 Amministrazione delle Finanze ν Salumi, Vasanelli and Ultrocchi [1980] ECR 1237). It is of the opinion that the principle of legal certainty requires protection of legitimate expectation to be accorded where a Community citizen has manufactured flakes without being in a position to take into account the Explanatory Notes to the Customs Cooperation Council Nomenclature.

Accordingly, Wünsche suggests that the Court reply to the second question in the following manner:

“It was possible to have recourse to the Brussels Explanatory Notes 1 as an aid to interpretation in relation to exports of sorghum flakes carried out in 1965. However, they should be interpreted as meaning that sorghum flakes required hulling only to the extent indicated in the reply to the first question. In addition, the national courts have jurisdiction to ensure that a person entitled to a refund enjoys the protection of legitimate expectation in accordance with the principles recognized in his State if, as a result of a general failure to recognize the importance of the Brussels Explanatory Notes 1 as an aid to interpretation, he exported sorghum flakes which, although they failed to fulfil the requirements of the Explanatory Notes on the Brussels Nomenclature, 1 met the conditions for sorghum flakes imposed by the regulations concerning refunds in force in his Member State, or by the authorities responsible for granting the refund”.

As to the third question, Wünsche observes that the reply to the first question renders a reply to this question superfluous. Should a reply nevertheless be required, it suggests the following:

“As to the degree of hulling in the case of flaked cereal, reference should be made not to Note (3) but to Note (6) of the Explanatory Notes of the Brussels Customs Council. According to that note, flakes may retain part of their husk [pellicule]. That should be understood as meaning that the outer skin, namely the husks and bracts, and not the pericarp, must be removed. It is not necessary for the floury kernel to be visible”.

As to the fourth question, Wünsche suggests that the reply, in so far as one is required, should be as follows:

“The requirements for the grant of refunds as regards the quality and characteristics of flaked cereal are those which applied for the purpose of charging the levy when the goods were imported”.

The Federal Office observes that since the descriptions of the goods are found in the tariff headings of the Common Customs Tariff they should be defined in the light of the basic criteria for interpreting the Common Customs Tariff. Those criteria are undoubtedly the Explanatory Notes and the classification opinions under the Customs Cooperation Council Nomenclature dating from 1955.

It was on that ground that the Court turned to the above-mentioned Explanatory Notes in order to interpret tariff headings, and in particular with regard to the Community provisions concerning refunds which were in force during the transitional period (judgment of 15 December 1971, Case 21/71 Brodersen ν Einfuhr- und Vorratsstelle fiir Getreide und Futtermittel [1971] ECR 1069; judgment of 8 April 1976, Case 106/75 Merkur v Hauptzollamt Hamburg-Jonas [1976] ECR 531).

In Case 106/75 the Court concluded that in order to make flakes within the meaning of the Common Customs Tariff certain cereal grains must have been subjected generally to hulling, a process consisting in the removal of part of the husk from the grain.

Those findings should not be applied exclusively to the flaked barley which was the subject-matter of the dispute. The Federal Office is of the opinion that as the Court referred quite simply to the term “flakes” employed in the Common Customs Tariff the findings are

applicable not only to barley but to all flakes made from cereal grains. The Bundesfinanzhof [Federal Finance Court] has declared its support for that ruling by the Court. In its judgment of 17 October 1978 (No VII R 119/75) the Bundesfinanzhof ruled out the possibility of granting a refund for a product which, although described as “sorghum flakes”, had not undergone the hulling process required under the Explanatory Notes on tariff subheading 11.02.

The Federal Office maintains that the fact that the exports at issue were carried out before the first judgments of the Court is irrelevant, since the question is one of interpretation, namely of the concept of “flakes” (cf. judgment of the Bundesfinanzhof of 8 January 1980, No VII R 40/77). It was open to the plaintiff in the main action to consult every available guide in order to interpret the Common Customs Tariff, and principally the Explanatory Notes to the Customs Cooperation Council Nomenclature which have been in existence since 1955.

The Federal Office challenges the argument that reliance on the Explanatory Notes would place a “restriction” on the literal wording of the relevant provisions. In its opinion it is commonly agreed that the provisions relating to levies and refunds did not adequately define the descriptions of goods and that that lacunae as far as the content of the terms employed was concerned could not be remedied by having recourse to the General Rules for the Interpretation of the Common Customs Tariff Nomenclature. To clarify a term using aids to interpretation which help to reveal the legislature's intention is not to restrict the wording of the law.

The Federal Office adds that in its opinion the insertion by the Council in Regulation No 141/64 of an express provision to the effect that flakes must be manufactured from hulled cereal would certainly have been helpful. Evidently, however, the Council thought such a clarification unnecessary, considering that the term “flakes” had been taken from the provisions in the Common Customs Tariff and that it should therefore be interpreted in accordance with the provisions of that tariff.

In addition the Federal Office observes that whilst there are refund rates for sorghum flakes based on a conversion rate of 180/100, that is only justified after an intensive treatment such as hulling. If the grains have undergone winnowing, thus losing only their bracts, a processing coefficient of 180 is not justified. Similarly, heat-treatment and rolling must be considered as relatively simple operations. A high coefficient can only be justified after intensive treatment such as hulling, that is to say, the removal of the greater part of the pericarp. In that respect no distinction was made by the legislature between naked cereal and other cereal.

It concludes that the Court should reply to the questions that:

“1. Sorghum flakes, within the meaning of Article 5 (1) B (b) of Regulation (EEC) No 141/64, must be made from hulled grains of sorghum. 2. That interpretation is derived from both the Brussels Explanatory Notes and the general logic of Regulations (EEC) No 55/62, No 92/62 and No 141/64. 3. In the case of sorghum, therefore, hulling means that the grains must have had the pericarp, including the aleuron cells, removed in such a manner as to reveal the greater part, that is to say more than 75%, of the floury kernel”.

III — Oral procedure

Oral argument was presented at the sitting on 26 March 1981 by Wünsche, the plaintiff in the main action, represented by F. Modest; by the Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets], the defendant in the main action, represented by A. Stockburger; and by the Commission of the European Communities, represented by M. Beschel of the Commission's Legal Department, acting as Agent.

At the sitting the Commission submitted observations which may be summarized as follows:

The Commission referred to the judgment in Case 106/75 (mentioned above) where it is stated that flaked grain is produced by hulling. It observed that whilst the Hessisches Finanzgericht considered that on the basis of that judgment the action brought by Wünsche must be dismissed, there were two reasons which caused that court to doubt whether the judgment in question should be followed.

First, the facts of the case in point date back to a period prior to the judgment in Case 106/75 and interested parties in the Federal Republic of Germany were not in a position to consult the Explanatory Notes of the Customs Cooperation Council, which at the time existed only in French and English.

The Commission said that in its view the question was a general one on the interpretation of the Common Customs Tariff. The Court had stated that the Explanatory Notes might be used as an aid to interpretation.

Second, Case 106/75 concerned not “naked” cereals but only cereals of the bracteiferous variety.

The Commission observed first that the wordings of subheading 11.02 of the Common Customs Tariff in force at the time of the facts in question, of the Nomenclature of the Customs Cooperation Council and of the Explanatory Notes to the subheading were identical to the texts on which the Court ruled in Case 106/75. Therefore the interpretation which was given in the judgment in Case 106/75 must also apply in this case.

The Commission was of the opinion that sorghum is a “naked” cereal, which meant that the bracts separate from the body of the grain when it is threshed. “Hulling” in relation to cereal of that kind could refer only to the removal of the pericarp and the testa. The Nomenclature of the Customs Cooperation Council assumed that for there to be “flakes” a portion of the outer covering must be retained. The mention in brackets contained in the Notes referred to barley and oats, which meant quite simply that those cereals were frequently met with in practice, but that did not mean that the enumeration was exhaustive. The Explanatory Notes could properly be understood only as meaning that for the purposes of the Tariff the concept implied in the case of naked cereals the partial removal of the hulls. That was confirmed by paragraph (3) of the Explanatory Notes on subheading 11.02 which includes as hulled grain that from which the pericarp has been partially removed or, in the case of bracteiferous cereals, grain from which the bracts have been removed inasmuch as the latter continue to adhere to the kernel.

A distinction was therefore to be made between naked cereals, from which the pericarp was removed, and bracteiferous cereals, from which both the bracts and part of the pericarp were removed. The relevant regulations had taken account of such technical details by fixing different rates of refund, for the amount of working involved differed as between cereal of the bracteiferous variety and naked cereal.

In conclusion the Commission suggested that the Court's reply to the questions should be as follows:

“The term ‘flakes of sorghum’ within the meaning of Article 5 (1) B (b) of Regulation (EEC) No 141/64 of the Council implies that the goods have been subjected to a milling process whereby more than 50% of the pericarp has clearly been removed”.

The Advocate General delivered his opinion at the sitting on 4 June 1981.

Decision

1. By order of 25 June 1980 which was received at the Court on 9 July 1980 the Hessisches Finanzgericht [Finance Court, Hesse] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions concerning the interpretation of Regulation No 19 of the Council of 4 April 1962 on the progressive establishment of a common organization of the markets in cereals (Journal Officiel 1962, p. 933 ) and Regulation No 141/64 of the Council of 21 October 1964 on the rules applying to processed products derived from rice and other cereals (Journal Officiel 1964, p. 2666 l).

2. The main action concerns the export refunds payable in respect of a product which the exporter had described as “sorghum flakes with an ash-content of 2% or less by weight on the dry product”. On the basis of that description the refund should be calculated on the basis of a processing coefficient of 180/100, meaning that a quantity of 180 kg of sorghum was required in order to produce 100 kg of flakes.

3. On the basis of an expert's analysis the German agricultural intervention agency responsible for granting the refunds in question found that the exported goods were made from sorghum grains which had not been hulled. It therefore took the view that the refund should be calculated on the basis of a processing coefficient of 102/100 (for rolled grains) instead of 180/100 (for flakes). In so doing it relied on Explanatory Note (6) on subheading 11.02 of the Explanatory Notes to the Customs Cooperation Council Nomenclature, according to which flakes must be made from hulled grains.

4. It was not contested by the exporter that the sorghum grains used to make the goods exported had not been hulled but merely subjected to steam-treatment and rolled out. However, it maintained that Article 5 (1) of Regulation No 141/64, which lays down the processing coefficients applicable in respect of flakes, did not subject the application of the coefficient of 180/100 to any condition other than that concerning the ash-content, and that that condition was satisfied in the case in point.

5. In order to be able to resolve the problems thus raised as to the interpretation of Community rules the Finanzgericht referred the following four questions to the Court of Justice :

“(a) Do ‘flakes of sorghum’ [Flocken von Sorghum] (Article 1, Point (d), of Regulation (EEC) No 19 in conjunction with the annex thereto) of the type referred to in Article 5 (1) Β (b) of Regulation (EEC) No 141/64 ([having an ash-content of] 2% or less by weight on the dry product) differ from sorghum flakes [Sorghumflocken] of the type referred to in Article 5 (1) Β (c) of Regulation (EEC) No 141/64 merely by their ash-content or should flaked sorghum [having an ash-content of] 2% or less by weight also be hulled? (b) In the context of Question (a) was it possible for the Explanatory Notes to the Customs Cooperation Council Nomenclature, which made the character of ‘flaked’ dependent on hulling (Explanatory Note No 62 to tariff heading No 11.02), to be used as an aid to interpretation in relation to exports in the year 1965? (c) Did the term ‘hulling’ as used in Note 2 to tariff heading No 11.02 mean, even in relation to sorghum which is a so-called naked cereal [Nacktgetreide] that the pericarp including the aleuron cells should have been removed in such a way that the floury kernel was ‘generally’ visible? Did ‘generally ’ mean: for the most part (more than 50%) or almost entirely (more than 75%)? (d) (By way of a complement to the above or — if Questions (a) to (c) are answered in the negative — alone). In interpreting the concept of ‘flakes’ should recourse be had to the penultimate paragraph in the preambles to Regulation (EEC) No 55 and Regulation (EEC) No 141/64, the first paragraph of Article 2 of Regulation (EEC) No 92 and the first paragraph of Article 15 of Regulation (EEC) No 141/64, according to which refunds for processed products were to be calculated on the basis of the levy applicable in respect of the basic products required for their manufacture?”

6. The first, third and fourth questions concern the interpretation of the words “flakes of sorghum”, whilst the method of interpretation to be used forms the subject-matter of the second question, which it is appropriate to examine first.

Second question (method of interpretation)

7. Article 5 of Regulation No 141/64 refers, for a description of the products to which it applies, to subheading 11.02 of the Common Customs Tariff. Similarly, in Article 1 of Regulation No 19, which was the basic regulation for the cereals sector at the time in question, and in the annex to that regulation, the products subject to the common organization of the markets are defined by reference to the headings of the Common Customs Tariff. It follows that the terms used by those two regulations to define and distinguish the various products processed from cereals have the same meaning as those which appear in the Common Customs Tariff.

8. The Court has already held, in its judgment of 15 December 1971 (Case 21/71 Brodersen [1971] ECR 1069) that in order to define the concepts used in the annex to Regulation No 19, in the absence of explanatory notes attaching to the Common Customs Tariff and in the light of the fact that the tariff heading in question exactly reproduced a heading in the Customs Cooperation Council Nomenclature, it was necessary to refer to the Explanatory Notes to that Nomenclature. In its judgment of 8 April 1976 (Case 106/75 Merkur-Außenhandel [1976] ECR 531) the Court decided on the basis of those Explanatory Notes that flakes are distinguished by the fact that they are produced by hulling, which consists of removing from the grains a portion of their husk.

9. The national court is uncertain whether to follow those decisions for three reasons.

10. In the first place, it notes in the grounds of its order that no interpretation is required if the terms of a piece of legislation are sufficiently clear and precise. Article 5 (1) Β (b) does not make the application of a processing coefficient of 180/100 to flakes of cereals other than barley and oats subject to any conditions other than that their ash-content must not exceed 2%.

11. Whilst the provision in question applies to flakes of sorghum having an ash-content of not more than 2% by weight, it contains no definition of the concept “flakes”. That concept may be defined only by referring to the words used both in the Common Customs Tariff and in the annex to Regulation No 19, as well as in Article 5 of Regulation No 141/64, to describe other products processed from cereals, such as kibbled, rolled, pearled or hulled cereal.

12. In the second place, the Finanzgericht has reservations about relying on the Explanatory Notes to the Customs Cooperation Council Nomenclature which were not known at the time to those concerned of the Federal Republic of Germany and which, moreover, were available only in English and French.

13. However, it is permissible for the national court to have recourse in interpreting the wording of provisions of Community law to commentaries originating within the Customs Cooperation Council, whose work has constituted an important factor in establishing and implementing the Common Customs Tariff. It must be noted, furthermore, that the Explanatory Notes had been published at the time of the facts in question and that they were available to those concerned.

14. Lastly, the national court asks whether it may base itself on the Explanatory Notes to the Customs Cooperation Council Nomenclature in the case of exports carried out in 1965, having agreed to the fact that the Explanatory Notes to the Common Customs Tariff, which coincide largely with those on the Nomenclature, were not published until later and the judgments of the Court which refer to the Explanatory Notes to the Customs Cooperation Council were delivered in 1971 and 1976.

15. It must be remembered, however, that the concept “flakes” had already appeared in the Common Customs Tariff and in the agricultural regulations applicable to products processed from cereals at the time of the facts in the case in point. The fact that the concept was interpreted by the Court after the events in question does not justify the inference that the same concept might previously have had a different meaning.

16. The reply to the second question must therefore be that it is permissible for the national court to use as an aid to interpretation, in relation to exports carried out in 1965, the Explanatory Notes to the Customs Cooperation Council Nomenclature, according to which the characteristic of flakes is that they are necessarily made from hulled grain.

The first, third and fourth questions (the concept of “flakes”)

17. It follows from the foregoing that the term “flakes” as used in Article 5 (1) Β (b) of Regulation No 141/64 is to be understood as implying that the product thus designated is made from hulled grain.

18. The first question and the first limb of the third question ask in effect if that applies also in the case of sorghum flakes, sorghum being a so-called “naked” cereal from which the bracts may be removed merely by threshing or winnowing, which is not so in the case of bracteiferous cereals, the bracts of which adhere strongly to the grain even after threshing or winnowing.

19. The process of hulling is explained in Explanatory Note (3) on subheading 11.02 of the Customs Cooperation Council Nomenclature, according to which hulled grain must have had the pericarp wholly or partially removed. Although the Note makes special reference to the bracteiferous varieties of barley it does not draw a distinction between naked cereals and bracteiferous cereals.

20. The exporter, who is the plaintiff in the main action, has contended that such an interpretation is not acceptable in the case of sorghum because removing the pericarp would be detrimental to the nutritive value of the product.

21. However, it should be emphasized that the food-value of a product is merely one of the factors which may be taken into consideration in classifying a product in a particular heading of the Common Customs Tariff. In the present instance the products processed from cereals which form the subject-matter of subheading 11.02 are identified, according to the wording of that heading and the Explanatory Notes thereon, by the basic products from which they are made and by the technical operations to which they have been subjected.

22. The second limb of the third question asks whether, in order to be considered as hulled, the grains must have had their pericarp, including the aleuron cells, removed.

23. Explanatory Note (3), cited above, states that in hulled grain the pericarp has been “wholly or partially” removed: “generally the floury kernel is then visible”.

24. That explanation indicates that the hulling process consists of removing the pericarp from the grain wholly or partially, in such a way that in most cases the whole or partial removal of the pericarp entails the removal, from a portion of the outside of the grain, of the inner covering (the testa) and the aleuron cells, so that part of the floury kernel is revealed.

25. The reply to the first and third questions must therefore be that Article 5 of Regulation No 141/64 is to be interpreted as meaning that sorghum flakes are produced from hulled sorghum grains. The grain is hulled when part or the whole of the pericarp is removed so that in most cases the floury kernel becomes partially visible on the outside of the grain.

26. That interpretation is borne out, moreover, by the general logic of Article 5 of Regulation No 141/64. There can be no reason for applying a processing coefficient of 180/100, a rate justified by the amount of the basic product lost in the course of processing it into flakes, to sorghum grain which has merely been subjected to steam-treatment and rolling.

27. In these circumstances the fourth question put by the national court is redundant.

Costs

28. The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As this case is, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings before the national court, the decision as to costs is a matter for that court.

On those grounds, THE COURT (First Chamber), in answer to the questions referred to it by the Hessisches Finanzgericht by order of 25 June 1980, hereby rules:

1 It is permissible for the courts to use as an aid to interpretation, in relation to exports carried out in 1965, the Explanatory Notes to the Customs Cooperation Council Nomenclature, according to which the characteristic of flakes is that they are necessarily made from hulled grain.

2 Article 5 of Regulation No 141/64 is to be interpreted as meaning that sorghum flakes are produced from hulled sorghum grain. The grain is hulled when part or the whole of the pericarp is removed so that in most cases the floury kernel becomes partially visible on the outside of the grain.

1 There is no authentic English version of this regulation.

2 Translator's note: There is no authentic English version of this regulation.

3 Translator's note: There is no authentic English version of this regulation.

4 That is: “The Explanatory Notes to the Customs Cooperation Council Nomenclature”.

5 There is no authentic English version of this regulation.