JUDGMENT OF 27. 5. 1982 — CASE 50/81 KADERS v HAUPTZOLLAMT HAMBURG-ERJCUS

In Case 50/81 REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court] for a preliminary ruling in the proceedings pending before thai court between

THE COURT (First Chamber) composed of: G. Bosco, President of Chamber, A. O'Keeffe and T. Koopmans, Judges, Advocate General: P. VerLoren van Themaat Registrar: H. A. Rühi, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community may be summarized as follows:

I — Facts and written procedure

In May 1977. the plaintiff in the main action imported a product originating in the United States of America described in the invoice as “Extract of Black Pepper decolorized”. According to information provided by the piaintift. the imported extract of pepper is a vegetable extract extracted by means of a solvent, which contains all the constituent substances (components) of the fruit of the pepper plant and which is made up as follows:

Approximately 16% essential oil;

Approximately 46o/c piperine;

Approximately 38o/c other extractive substances, such as chlorophyll, carbohydrates etc.

The defendant in the main action, the Hauptzollamt [Principal Customs Office] Hamburg-Ericus (hereinafter referred to as “the Hauptzollamt”), classified the product in question as a vegetable extract falling under tariff heading 13.03 of the Common Customs Tariff. Subsequently, following an expert's repon bv the Zolltechnischc Prufungs- und Lehranstalt [Customs Laboratory and Training College] Hamburg, the Hauptzollamt classified the product as resmoid under tariff subheading 33.01 C and made a retroactive levy of customs duty.

Tariff heading 13.03 covers vegetable saps and extracts apart from the products listed in Notes (a) to (ij) to Chapter 13. Under Note (h) to that Chapter, a vegetable extract falls under tariff heading 33.01, not tariff heading 13.03, if it constitutes essential oils, concretes, absolutes and resinoids.

The plaintiff's objection and subsequent action before the Finanzgericht [Finance Court] Hamburg were unsuccessful.

The Finanzgericht took the view that the imported extract of pepper was indisputably a vegetable extract which, however, according to Note (h) to Chapter 13 of the Common Customs Tariff did not fall within tariff heading 13.03, if it displayed the characteristics of resinoids under tariff heading 33.01. According to the Explanatory Notes to the Customs Cooperation Council Nomenclature, products similar to concretes extracted, usually by solvent action, from various dried parts of plants were described as resinoids. According to the Explanatory Notes to the Customs Tariff of the European Communities, resinoids were remarkable inasmuch as they reproduced the fragrance of the extracted substance. Resinoids were often called oleoresins. In the Annex to the Explanatory Notes to Chapter 33 of the Customs Cooperation Council Nomenclature, the list of resinoids also included inter alia resinoids of pepper.

In accordance with those considerations, resinoids or oleoresins were generally described in the literature on the subject as vegetable extracts which were used as spices in the manufacture of foodstuffs. In the Federal Republic of Germany, they were also known as extracts of spices and were used for the same purpose as natural spices, but brought out the fragrance of the extracted substance more fully.

The Finanzgericht considered that the imponed product exhibited the characteristics of resinoids or oleoresins. It found that it indisputably contained 20% essential oil of pepper and other substances which could be extracted from pepper, especially piperine.

In its appeal on a point of law to the Bundesfinanzhof, the plaintiff claimed that the product was a vegetable extract and that unless it could be considered as essential oil or resinoid it had to be classified under tariff heading 13.03. According to the plaintiff, essential oils under tariff heading 33.01 were products in which the presence of fragrant substances constituted an essential characteristic. The essential oils contained in the imported extract of pepper did not make it a resinoid, since it was not extracted on account of its negligible odoriferous constituents (essential oils) or used for that reason as a fragrant substance in the perfume industry. The extract of pepper was characterized rather by its other contents, including the piperine which determined its taste and equally caused it to be used as a spice. It ought therefore to be classified under tariff heading 13.03.

According to the Explanatory Notes on tariff headings 13.03 and 33.01, the decisive factor for the purpose of tariff classification was not from which plant the vegetable extract was obtained, but only how great a proportion of odoriferous substances (essential oils) were contained therein. As a result, it was not significant that in the Annex to the Explanatory Notes to the Customs Cooperation Council Nomenclature (Chapter 33) ginger was also mentioned, since it was indisputable that oil of pepper was also extracted from the ginger root and used as a fragrant substance in the perfume industry. However, oil of ginger had nothing in common with the extract of pepper which contained all the typical constituent substances of pepper and was used as a spice.

The plaintiff also stated that the Explanatory Notes to the Customs Tariff, to which the Finanzgericht referred, were not adopted until 4 April 1978. At the time of the import in question, in May 1977, they did not exist. As a result, it was impossible for the Finanzgericht to refer to them retroactively in order to interpret the Customs Tariff. That also applied to the Explanatory Notes t j the Common Customs Tariff on tariff heading 13.C3.

The Hauptzollamt contended before the Bundesfinanzhof that the imported extract was an extrán from an aromatic plant, obtained by means of organic solvents, and containing all the typical constituent substances of the raw material (essential oil, piperine, pipendine, resins, cellulose etc.) and was remarkable in so far as it contained in a highly concentrated form all the fragrant constituents of the natural spice, whose fragrance it reproduced more fully than could the oil present in the raw material. By its method of extraction, its properties and its use, such a product was characterized as a resinoid.

According to the Hauptzollami, Note (h) to Chapter 13 expressly provided that tariff heading 13.C3 did not apply to resinoids, which were to be classified under tariff heading 33.01.

It followed from the French and English versions of the Explanatory Notes to the Customs Cooperation Council Nomenclature on tariff heading 13.03 that the character of resinoids was determined by their fragrant (that is. as regards smell and taste) substances. The proportion of odoriferous substances contained in an extract was not decisive.

In the Hauptzollamt's opinion, the Finanzgericht had made no error with regard to the content, meaning and scope of the Explanatory Notes to the Customs Tariff of the European Communities on tariff headmp 33.01. They were intended only as clarification and might therefore be applied retroactively.

The Bundesfinanzhof considers that the replv to the question concerning the lawfulness of the contested notice of assessment depends on the interpretation of the concepts of “vegetable extracts” and “resinoids” contained in the Customs Tariff.

By an order of 10 February 1981, the Bundesfinanzhof decided to stay the proceedings pending before it and refer to the Court for a preliminary ruling the following questions:

“How must tariff heading 13.03 (vegetable extracts) and tariff subheading 33.01 C (resinoids) be interpreted and demarcated in relation to one another? Is a product described as “Extract of black pepper decolorized” [sic] consisting of 16 or 20 % essential oils, 40 or 46 % piperine and 38 or 40 % other extracts to be regarded as vegetable extract coming within tariff heading 13.03 or, having regard to the amounts of odoriferous substances or fragrant constituents as resinoid falling within tariff subheading 33.01 C, even though as vegetable extract it contains all the typical contents and constituent substances of the fruit of the pepper plant? In addition to the essential oils, does for example piperine also belong to the odoriferous substances or fragrant constituents?” The order for reference was lodged at the Court Registry on 9 March 1981.

In its order for reference, the Bundesfinanzhof takes the view that it is impossible to classify the imponed product as essential oil because, in addition to oil of pepper as an essential oil, it contains other constituent substances of pepper. Classification of the product in question under tariff heading 33.CI is therefore possible only if for the purpose of the tariff it may be considered to be a resinoid. Neither the wording of Note (h) on Chapter 13 nor tariff heading 33.01 indicate the way in which the term “resinoid” is to be interpreted.

According to the Bundesfinanzhof it follows from the fact that tariff heading 33.01 includes resinoids as well as essential oils that the composition of the iormer must be different from that of essential oils. Nevertheless, it cannot be inferred from the wording of tariff headings 13.03 and 33.01 that vegetable extracts must necessarily always be classified as resinoids under tariff heading 33.01 where, as in the case of the extract of pepper in question, they have a 16 % to 20 % content of essential oils. If the situation were otherwise all vegetable extracts would always be classified under tariff heading 33.01 if they contained even trifling quantities of essential oils, with the result that tariff heading 13.03 would be largely reduced to a mere cipher.

The Bundesfinanzhof considers that the Explanatory Notes to the Customs Cooperation Council Nomenclature and those to the Customs Tariff of the European Communities are not capable of solving the existing problems of interpretation.

According to the Explanatory Notes to the Customs Cooperation Council Nomenclature regarding tariff heading 13.03, (Subheading (A), note (k) on excluded products), which were in force at the time of importation, resinoids fall in accordance with Note (h) on Chapter 13 and the wording of tariff heading 33.01 not under tariff heading 13.03 but under tariff heading 33.01. According to the Explanatory Notes, resinoids differ from vegetable extracts under tariff heading 13.03 inasmuch as they are essentially composed of odoriferous substances, h is further noted in the Explanatory Notes that, according to whether the steam distillation or the solvent process is employed, certain plants can give either the essential oils of heading 33.01 or the extracts falling within heading 13.03. An extract differs from an essential oil in that it contains, apart from the odoriferous constituents, a far higher proportion of other plant substances (for example clorophyll, tannins, bitter principles, carbohydrates and other extractive matter).

The plaintiffs opinion that vegetable extracts fall under tariff heading 13.03 in so far as thev contain all the typical constituents of the original product and may be considered to be essential oils and resinoids only if they contain solely the truly odoriferous constituents may be supported by the fact that, on the one hand, valerian and garlic extracts, for example, fall under tariff heading 13.03 (cf. Subparagraph (8) of the second paragraph of Pan A of the Explanatory Notes to the Customs Cooperation Council Nomenclature on tariff heading 13.03) and, on the other, valerian and garlic oils or resinoids are listed in the Annex to the Explanatory Notes to the Customs Cooperation Council Nomenclature regarding Chapter 33 as falling under tariff heading 33.01.

The Explanatory Notes to the Customs Tariff of the European Communities on tariff subheading 33.01 C, adopted in June 1978, that is to say after the time of importation, which is determinant, also fail to remove the existing doubts as to the classification of extract of pepper. According to the notes, resinoids extracted from certain parts of plants are remarkable in that they reproduce the fragrance of the extracted substances more fully than does the essential oil alone which is generally present in the raw material. As the Finanzgericht also considered, those Explanatory Notes are to some extent in contradiction with the Explanatory Notes to the Customs Cooperation Council Nomenclature on tariff heading 13.03. As regards the concept, for tariff classification purposes, of resinoids, those notes state, albeit not unequivocally, that they must essentially be composed of odoriferous substances. The Explanatory Notes to the Customs Tariff of the European Communities on tariff heading 33.01 do not go into that point. Furthermore, they establish a connection between the fragrance and the essentia! oil contained in the raw material, which leads to the conclusion that in the main only essential oils and not other flavouring substances such as piperine, for example, are to be considered as odoriferous substances indicative of resinoids.

Finally, the Bundesfinanzhof considers that there is also doubt whether the Explanatory Notes to the Customs Tariff of the European Communities should be applied retroactively, since they were not published until after the time of importation.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by Paul Kaders GmbH, represented by H. Heemann of Messrs. Modest, Rechtsanwälte, Hamburg, and by the Commission of the European Communities, represented by P. Karpenstein, Legal Adviser, acting as Agent, assisted by Rolf Streckmann, tax consultant, Frankfurt am Main.

Upon 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 enquiry. By order of 26 October 1981, the Court decided to assign the case to the First Chamber. The parties and the Commission were requested to provide further information on the practice in the various Member States in relation to the tariff classification of the product concerned.

II — Written observations submitted to the Court

Paul Kaders GmbH, the plaintiff in the main action, claims that in this case it is necessary to determine what is meant byvegetable extracts described as resinoids under tariff subheading 33.Cl C of the Common Customs Tariff and how they should be delimited in relation to other vegetable extracts under tariff heading 13.03.

In that regard, reference should first be made to tariff heading 13.03, which includes all vegetable saps and extracts except for the products listed in Notes (a) to (ij) to Chapter 13 which are classified under a more specific tariff heading. Those goods may be divided on a systematic basis into four groups, group (d) of which covers vegetable extracts containing certain constituents (Notes (g) and (h)). Apart from tanning or dyeing extracts, the latter group covers essential oils, concretes, absolutes and resinoids which should be classified under uri f f heading 33.03.

The plaintiff contends that the title of Chapter 33, “Essential oils and resinoids; perfumery, cosmetic or toilet preparations”, shows that the Customs Tariff equates essential oils and resinoids and that it classifies them among perfumery, cosmetic or toilet preparations.

It is clear from definitions to be found in dictionaries that resinoids are obtained from odoriferous resins and balsams and are used as fragram and odoriferous substances in the perfume and soap industry for the manufacture of perfumen, toilet and cosmetic preparations. The same is true of essential oils extracted from various plants by reason of their odoriferous nature, which are chiefly used as scented products in the soap, perfume and cosmetic industry.

Essential oils and resinoids thus share an essential characteristic in so far as they contain wholly or mainly odoriferous constituents (essential oils) of the original product, they are extracted for that reason and are used as scented products, in particular in the perfumery and soap industry. As a result, they are different both in their composition and the use to which they are put from all the other vegetable extracts under tariff heading 13.03, which do not contain wholly or mainly odoriferous constituents of plants, which are not extracted by reason of the existence of the latter and which are not used as odoriferous products. As a result, the mere fact that other vegetable extracts also contain odoriferous substances (essential oils) is of no importance with regard to the distinction between tariff headings 13.03 and 33.01

The authors of the Common Customs Tariff classified the typical raw materials of resinoids, that is to say resins and balsams, under Chapter 13 and not among resinoids. That shows that even balsams characterized by their odoriferous substances are not classified among resinoids under tariff subheading 33.01 C because, in addition to odoriferous constituents, thev also contain all the other constituem elements and because resinoids differ from vegetable extracts under Chapter 13 in so far as, in essence, they contain onlv odoriferous substances and not in addition the other constituents of the raw material.

The plaintiff states that as regards the classification of a vegetable extract as a resinoid under tariff subheading 33.01 C, it is not essential that in addition to us other constituent elements it should also contain at least the odoriferous substances typical of its fragrance (essential oils), but onlv that it should be extracted precisely because of its odoriferous substances, and that in the process its other constituents should be removed in whole or in pan and that it should be used as a fragrant or scenting substance.

As a result, according to the plaintiff, the extract of pepper which it imported is not a resinoid under tariff subheading 33.01 C, because it was not extracted by reason of its odoriferous constituent elements and also because it is not used as a scenting product in the perfumery industry by reason of the tvpical constituents of its fragrance (essential oils).

The imported extract of pepper is characterized far more by its other constituents, including the piperine which determines its taste. It is extracted by reason of its constituents and is used exclusively as a fragrant substance. That is why it is a vegetable extract which falls within tariff heading 13.03 and which, like all other vegetable extracts obtained by reason of their fragrant substances and used as spices, does not fall under a more specific tariff heading by virtue of the provisions of Chapter 13. Indeed, Notes (g) and (h) on Chapter 13 contain only an exception for vegetable extracts characterized by their dveing, tanning and odoriferous substances and used accordingly.

The plaintiff contends that it is clear from the Explanatory Notes to the Customs Cooperation Council Nomenclature that in order to determine whether a vegetable extract should be classified under tariff heading 13.03 or under tariff heading 33.01, only the proportion of odoriferous constituents (essential oils) of the vegetable extract is determinant. If. in addition to the common odoriferous constituents (essential oils), it contains a far higher proportion of other plant substances, the vegetable extract concerned should be classified under tariff heading 13.03. If, on the other hand, it is made up mainiv of odoriferous constituents (essential oils), and contains only small quantities of other plant substances, it should be classified under tariff heading 33.01 as an essential oil or resinoid. The question whether a vegetable extract should be classified under tariff heading 13.03 or under tariff heading 33.01 is therefore determined not by the plant from which it is extracted but only by the proportion of odoriferous substance (essential oils) which it contains.

The differentiation between tariff headings 13.03 and 33.01 made by the Explanatory Notes assimilates resinoids and essential oils and treats them equally from the point of view of tariff classification, regardless of the differences which exist between them in an individual case.

The Explanatory Notes to the Common Customs Tariff on tariff subheading 33.01 C describe resinoids as follows:

“Resinoids are extracted from certain parts of plants or from certain animal substances by means of solvents. They are remarkable in that they reproduce the fragrance of the extracted substances more fully than does the essential oil alone which is generally present in the raw material. Resinoids intended for the food industry are also often called oleoresins”.

The decisive criterion characterizing a resinoid is thus the fact that it reproduces the fragrance more fully than the essential oils contained in the raw material are generally able to do. The point of reterence which makes it possible to say that the fragrance is reproduced more completelv is constituted by the essential oils of the raw material which in their turn determine the odoriferous nature of the extract, as is shown bv the definition of essential oils in me Explanatory Notes to the Customs Tariff of the European Communities on tariff subheading 33.01 B:

“Essential oils are rather complex mixtures, the constituents of which are of varying importance, from the perfume point of view. Some, by nature, spoil the fragrance and are preferably removed ...”.

That means simply that the essential oil determining the odoriferous character of the vegetable extract contains in pan constituent substances which may aftect its fragrance, that is to say its odoriferous character, and which must therefore be removed. That shows that the concepu of “fragrance” and “perfume” appearing in the Explanatory Notes to the Customs Tariff of the European Communities on tariff subsheadings 33.01 B and C have the same meaning and refer to the general impression of essential oil or resinoid provided by the smell.

The same result is achieved on the basis of the concept of “oleoresins” newly introduced in the Explanatory Notes to the Customs Tariff.

The concept of “oleoresin” has several meanings. The plaintiff cites the definition provided by the Römpp Chemistry Dictionary:

“Ambiguous concept which is used to refer to balsams on the one hand and concentrated extracts of spices on the other ...”.

In English, it is in general customary to describe extracts of spices as oieoresins whereas in German the use of the word “extract” remains prevalent to describe spices obtained from vepeiable extracts However, apan from that, the English customs authorities regard extraits ot spices (usuallv called “oleoresins” in English) as vegetable extracts falling within tariff heading 13.C3 and not as resinoids.

That shows that neither the name of oleoresin given by the American manufacturer to the extract of pepper imponed by the plaintiff nor the use of the concept of oleoresin in the Explanatory Notes to the Customs Tariff of the European Communities on tariff heading 33.01 is decisive in relation to the classification of the spice extract in issue and the dividing-line between tariff headings 13.03 and 33.01.

In conclusion, the plaintiff suggests that the questions referred to the Court for a preliminary ruling by the Bundesfinanzhof should be answered as follows:

“1. Tariff heading 13.03 covers all vegetable extracts which are obtained by means of solvents and contain all the typical plant substances (constituents). Tariff subheading 33.01 C covers vegetable extracts which are extracted by reason of their odoriferous substances and used as scenting or odoriferous substances. They differ from vegetable extracts falling within tariff heading 13.03 in so far as they contain essentially only the odoriferous constituent substances of the plant. 2. The extract of pepper at issue in this case contains all the typical constituents of the fruit of the pepper plant. For that reason it should be classified as a vegetable extract falling within tariff heading 13.C3, regardless of the fact that among its natural constituent elements there are also odoriferous substances (essential oils). 3. The piperine contained in the extract of pepper is a flavouring substance and not a scenting substance. Therefore piperine is not among the odoriferous substances (essential oils) of the fruit of the pepper plant.”

The Commission observes that the Bundesfinanzhofs first question concerns the delimitation of tariff heading 13.03 in relation to tariff subheading 33.01 C and raises a problem of the interpretation of secondary legislation. The second question should be understood as follows:

“Must a vegetable extract which contains all the typical constituent elements and substances of the fruit or plant be classified as resinoid under tariff subheading 33.01 C, having regard to all of its odoriferous substances or fragrant ingredients?”

In the Commission's view the third question asks whether the odoriferous substances of an extract, such as piperine, may also be taken into consideration to justify classification of the extract as resinoid.

Seen in that way, the questions submitted concern first the delimitation of tariff heading 13.03 (vegetable extracts) and tariff subheading 33.01 C (resinoids) of the Common Customs Tariff. The wording of the two tariff headings is the same today as it was at the time of the imports in question.

The Explanatory Notes to the Customs Tariff of the European Communities on tariff subheading 33.01 C were not amended until after the imports in question, that is to say in April 197S. The Commission contends that those Notes and the Explanatory Notes to the Customs Cooperation Council Nomenclature and the Classification Opinions thereon are only explanatory or clarificatory and cannot amend the provisions of the Common Customs Tariff itself. Therefore the Commission considers that the Notes in question are not decisive for the ruling to be given on the questions put to the Court; the essential factor is the classification under the Common Customs Tariff. Tariff heading 13.03 refers only to vegetable saps and extracts. The introductory notes to Chapter 13 provide thai it does not apply to a scries of vegetable saps and extracts, which are to be classified under other headings. The essential oils and resinoids are to be classified under subheading 33.01 C. Other products classified under Chapter 33 are distinguished from vegetable extracts classified under heading 13.03 by a pleasant smell or taste and are used as fragrant substances in the perfume industry or as flavouring substances in the food industry or constitute finished products in themselves. All those products are specifically characterized by the quality of their smell or uste, in short by their aroma. Under the scheme of the Customs Tariff itself, fragrant raw materials are referred to in the first three tariff headings of Chapter 33, whereas mixtures and basic substances intended for certain industries are cited in the third tariff heading and finished products in the two final tariff headings.

The Commission gives certain physiological details on human taste and smell.

“The sense of taste is perceived by taste buds which are to be found mostly on the back pan of the tongue and roof of the mouth. However, taste buds are capable of perceiving only pure ustes, that is to say those which are sour, sweet, salry and bitter. The olfactory cells are to be found in the back nasal cavity. The nose is connected to the buccal cavity through the nasopharyngeal cavity. When one chews or drinks, fragrant substances reach the olfactory cells in the course of breathing through the nasopharyngeal cavity and produce an olfactory sensation which combines with the gustative sensation and is absorbed by the latter. All gustative sensations, except the tour pure sensations referred to above, are mixed perceptions of smell and taste. Much is thought to be tasted when in fact it is smelled. but the two perceptions cannot be separated since they are produced jointly and simultaneously. That is clearly demonstrated by the well-known apple-onion experiment: no difference in uste is perceptible if the sense of smell is neutralized by blocking the nostrils.”

Consequently odoriferous and fragrant substances cannot be clearly separated, particularly because a large number of odoriferous substances are also fragrant substances and vice versa. The two substances combined, but equally each of them separately, are described as the aroma of a substance. The words “odoriferous”, “pleasant-tasting” and “fragrant” are virtually synonymous in German, English and French.

The Common Customs Tariff itself does not make a clear distinction between those concepts, because that would be impossible. That is shown by the wording of tariff heading 33.04 of the Common Customs Tariff, where it is a matter of odoriferous or fragrant substances in relation to the perfumery and food industries.

The Commission contends that all the tariff headings in Chapter 33 refer to products characterized by their fragrance. Therefore resinoids must not be considered as substances intended exclusively for the manufacture of perfume or soaps.

The Explanatory Notes to the Customs Cooperation Council Nomenclature on tariff heading 13.03 provide that essential oils and resinoids differ from the vegetable extract covered by tariff heading 13.C3 “in that they are essentially composed of odoriferous substances.”

The Commission considers that odoriferous constituents and “odoriferous substances” are svnonymous. The Common Customs Tariff again eauates odoriferous substances with fragrant substances. It follows from that “odoriferous” is synonymous with “fragrant” for the purpose of the Customs Tariff. The Commission considers that, in reserving the word “odoriferous” to the sense of smell and refusing to attribute it also to the sense of taste, the plaintiff is mistaken.

The Commission believes that the tariff classification of a vegetable extract as resinoid is determined simply by the existence of odoriferous fragrant constituents. Unlike the plaintiff, which seeks to rely only on the proportion of essential oils, the Commission considers that the classification of a vegetable extract as resinoid depends on all of its fragrant constituents and thus, apan from essential oils, on the existence of other extractive substances, particularly the substances which confer upon the product its characteristic taste or smell and determine its value, and accordingly its marketing and use.

Resinoids are therefore extracts which contain in a concentrated form all the fragrant constituents of a plant; in addition to the essential oils which are not always present, they also contain soluble resins, dyes and other substances, that is to say all plant substances, which are soluble in the solvent used.

According to the well-established case-law of the Court, the objective qualities of products, their objective characteristics and properties (judgment of i: December 1975 in Case 53/73, Belgium v V'andertaeien and Maes, [1975] ECR 1647) are the decisive criteria for iheir customs classification. The characteristic of resinoids consists in their fragrance Consequently, vegetable extracts of pans of plants or fruits, characterized bv their properties of flavour and smell, must be classified as resinoid within the meaning of tariff subheading 33.01 C of the Common Customs Tariff.

The Commission suggests that the questions submitted to the Coun for a preliminary ruling should be answered as follows :

“1. Vegetable extracts whose character is determined by their fragrance fall as resinoids within tariff heading 33.01 of the Common Customs Tariff. 2. The fragrance of resinoids under tariff heading 33.01 is determined by all the fragrant extractive substances: the fact that there is a preponderance in weight or quantity of the fragrant substances of an extract is not a decisive factor. 3. Characteristic fragrant substances such as may also be taken into account for the customs classification of the vegetable extract as resinoid under tariff heading 33.01, in so far as they contribute to the fragrant properties of a vegetable extract.”

III — Oral procedure

At the sitting on 17 December 1981 oral argument was presented bv H. Heemann. of Messrs Modest, Rechtsanwälte, Hamburg, for the plaintiff in the main action, and P. Karpensiein, Legal Adviser, acting as Agent, assisted bv H. Streckmann, tax consultant of Franktun am Main, tor the Commission of the European Communities.

The Advocate General delivered his opinion at the sitting on 18 February 1982:

Decision

1. By an order of 10 February 1981, which was received at the Court Registry on 9 March 1981, the Bundesfinanzhof [Federal Finance Court] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the interpretation of heading 13.03 (vegetable extracts) and subheading 33.01 C (resinoids) of the Common Customs Tantt.

2. In May 1977 the plaintiff in the main action imported from the United States of America a product described as “Extract of Black Pepper”. The Hauptzollamt [Principal Customs Office] Hamburg-Ericus classified the product m question as vegetable extract falling within tariff heading 13.03 of the Common Customs Tariff. Subsequently, on the basis of a report of the Zolltechnische Prüfungs- und Lehranstalt [Customs Laboratory and Training Collegei Hamburg, the Hauptzollamt classified the product as resinoid falling within tariff subheading 33.01 C and made a retroactive levy of customs duty.

3. The administrative objection to that second classification and the subsequent action before the Finangericht [Finance Court] Hamburg were unsuccessful. Before the Bundesfinanzhof, the plaintiff in the mam action contended that the pepper extract was to be classified under tariff heading 13.03, because ot its composition, characteristics and properties.

4. Considering that the solution of the dispute depended essentially on the interpretation of the concepts of “vegetable extracts” and resinoids and on the determination of the appropriate criteria by a comparison ot the respective concepts, the Bundesfinanzhof referred to the Court for a preliminary ruling the following questions:

“How must tariff heading 13.03 (vegetable extracts) and tariff subheading 33 01 C (resinoids) be interpreted and demarcated in relation to one another. Is'a product described as ”Extract of black pepper decolorized [sic consisting of 16 or 20 % essential oils. 40 or 46 % piperine and 38 or 40 % other extracts to be regarded as vegetable extract coming within tariff heading 13.03 on having regard to the amounts of odoriferous substance or fraerant constituents as resinoid falling within tariff subheading 33.. 1 C. even though as vegetable extract it contains all the typical contents and constituent substances of the fruit of the pepper plant? In addition to the essential oils, does for example piperine also belong to the odoriferous substances or fragrant constituents?

5. Chapter 13 of the Common Customs Tariff covers “lacs; gums, resins and other vegetable saps and extracts”. According to Note (h) on the Chapter, it does not cover “essential oils, concretes, absolutes and resinoids (heading 33.01) or aqueous distillates and aqueous solutions of essential oils”. Subheading 13.03 A VIII covers “vegetable saps and extracts ... Other”.

6. Chapter 33 covers “Essential oils and resinoids; perfumery, cosmetic or toilet preparations”. Heading 33.01, “Essential oils (terpeneless or not), concretes and absolutes; resinoids” includes subheading 33.01 C, “resinoids”.

7. The plaintiff in the main proceedings contends that the product in question falls within subheading 13.03 A VIII because, in addition to the common odoriferous constituents (essential oils), it includes a far larger proportion of other plant substances. If, on the other hand, it consisted essentially of odoriferous constituents (essential oils) and contained only trifling quantities of the plant, it should be classified under tariff heading 33.01 as an essential oil or resinoid.

8. The Commission, on the other hand, considers that vegetable extracts whose character is determined by their fragrance fall as resinoids within tariff heading 33.C1. The fragrance of resinoids under that tariff heading is determined by all of the extracted fragrant substances. The fact thai there is or is not a preponderance in weight or quantity of fragrant substances of an extract is not a decisive factor. The Commission relies on the consideration thai the taste of a substance cannot be judged separately from us smell. That is corroborated by the fact that, in the Explanatory Notes to the Customs Cooperation Council Nomenclature, the title of tariff heading 33.04 includes, in the German version, the reference to “Riech- oder Aromastoffen” (odoriferous or fragrant substances). It infers from this that the essential characteristic of resinoids consists both in their smell and in their taste.

9. Thai view cannot be accepted. It does not take into account the fact that the other linguistic versions of the Explanatory Notes to the Customs Cooperation Council Nomenclature do not speak of “odoriferous or fragrant substances” but only of “odoriferous substances”. Moreover, it is incompatible with Note (k) on heading 13.03, which states that “An extract differs from an essential oil in that it contains, apart from the odoriferous constituents, a far higher proportion of other plant substances (for example chlorophyll, tannins, bitter principles, carbohydrates and other extr-arrive matter)”. In the same note it is stated that essences and resinoids tailing within heading 33.01 differ from extracts under heading 13.03 inasmuch as they are essentially composed of odoriferous substances.

10. From those considerations it may be inferred that “essential oils and resinoids” of products which contain, apart from odoriferous substances, a far higher proportion of other plant substances, such as chlorophyll, tannins, bitter principles or other flavouring substances, carbohydrates and other extractive matter which help to determine the typical character of the product do not fall within heading 33.01 of the Common Customs Tariff.

11. In particular, a product such as piperine is not among the odoriferous substances which fall within the said tariff heading, since its essential characteristics are determined largely by taste and not by smell.

Costs

12. The costs incurred bv the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

On those grounds, THE COURT (First Chamber) in answer to the question submitted to it bv the Bundesfinanzhof bv order of 10 February 1981 hereby rules:

1 “Essential oils and. resinoids” of products which contain, in addition to odoriferous substances, a far higher proportion of other plant substances, such as chlorophyll, tannins, bitter principles or other flavouring substances, carbohydrates and other extractive matter which help to determine the typical character of the product, do not fall within heading 33.01 of the Common Customs Tariff.

2 A product such as pipeline is not among the odoriferous substances which fall within the said tariff heading, since its essential characteristics are determined largely by taste and not by smell.

1 Translators note the E of the tariff heading refers to oderrous substances