Report for the Hearing in Case C-14/91

I — Legislative background

Tariff heading 2106 (Food preparations not elsewhere specified or included) in Chapter 21 of the Common Customs Tariff (Miscellaneous edible preparations) contains the following subheading 9091:

‘— Containing no milkfats, milk proteins, sucrose, isoglucose, glucose or starch or containing less than 1.5% milkfat, 2.5% milk proteins, 5% sucrose or isoglucose, 5% glucose or starch ...’.

Tariff heading 3823 in Chapter 38 (Miscellaneous chemical products) is worded as follows:

‘Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included: ...’.

Subheading 60 of the above heading reads as follows:

‘— Sorbitol other than that of subheading 2905 44: in aqueous solution: containing 2% or less by weight of D-mannitol, calculated on the D-glucitol content... other other: containing 2% or less by weight of D-mannitol, calculated on the D-glucitol content... other’

At its 44th meeting, held on 1 April 1980, on the Harmonized Commodity Description and Coding System, the Nomenclature Committee of the Customs Cooperation Council approved a note 1(b) to Chapter 38. According to that note,

‘1. This chapter does not cover: (b) mixtures of chemicals with foodstuffs or other substances with nutritive value, of a kind used in the preparation of human foodstuffs (generally heading No 2106); ...’

The relevant explanatory note reads as follows:

‘By virtue of this Note mixtures of chemicals and foodstuffs are excluded from Chapter 38. Unfortunately, the term “foodstuffs” does not embrace some substances which have a nutritive value but could be regarded as chemicals at the same time, e. g. Explanatory Note 21.07 paragraphs (4) and (15) refer to preparations consisting of chemicals and substances such as sorbitol and lactose (sugars of heading 29.43 or heading 17.02). There are many similar preparations for diabetics on the market, generally on the basis of sorbitol which can hardly be regarded as a “foodstuff” but does have a nutritive value’.

At its fourth meeting, held on 4 February 1991, the Scientific Sub-Committee of the Customs Cooperation Council drew up a list of simple ingredients which could be regarded as food preparations or other substances having nutritive value. The following table reproduces the list:

II — Facts and procedure

1. The Oberfinanzdirektion München, the defendant in the main proceedings, issued to SuCrest GmbH, the defendant in the main proceedings, on 12 September 1988 four binding customs notices in respect of various kinds of bakery and biscuit emulsifiers, pasty matter made from sorbitol syrup (70% by dry weight), monoglycerides and diglycerides and water — each of those preparations also containing carotene oil and propylene glycol — classifying them under subheading 2106 9091 of Chapter 21 of the Combined Nomenclature of the Common Customs Tariff (‘other’ edible preparations not elsewhere specified or included, containing no milkfats).

2. The plaintiffs objections, lodged on 22 September 1988, seeking classification under heading 3823 of Chapter 38 (chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included) were dismissed by decision of the Oberfinanzdirektion of 29 March 1990 on the ground that the preparations in question were mixtures of chemicals and foodstuffs with nutritive value used in the preparation of human foodstuffs, in particular for the manufacture of bakery products, and were thus excluded from Chapter 38 of the Common Customs Tariff. SuCrest commenced proceedings against that decision.

3. The Bundesfinanzhof (Federal Finance Court), before which the case was brought, considers that the decision to be given depends essentially on the interpretation of a provision of Community law. That provision, note 1(b) of Chapter 38 of the Common Customs Tariff excludes from that chapter mixtures of chemicals with foodstuffs or other substances with nutritive value, of a kind used in the preparation of human foodstuffs.

4. The Bundesfinanzhof states that it is inclined to share the view of the plaintiff, namely that the conditions for the exclusion of the mixtures in question from the abovementioned tariff heading are not satisfied in this case. In its view, the wording of that provision gives the impression that ‘foodstuffs or other substances with nutritive value’ can only be substances which cannot themselves be regarded as chemicals. However, sorbitol syrups such as those used in the preparations in question fall within subheading 382360 of the Common Customs Tariff. Moreover, there is no reason to regard sorbitol, a synthetic sweetener, as a foodstuff with nutritive value. The same would appear to apply to monoglycerides and diglycerides. The fact stressed by the plaintiff, namely that glycerides are of use physiologically, in the metabolism of fat, does not in itself enable any conclusions to be drawn regarding its nutritive qualities. Propylene glycol and carotene oil (colouring agents) are not in any event to be regarded as substances with nutritive value.

5. According to the Bundesfinanzhof, whilst tariff heading 3823 appears to be applicable, doubts nevertheless remain regarding the components sorbitol syrup ano głycerides (being substances without nutritive value — see the German notes on tariff heading 2106 — Harmonized System — note 33.0: notice concerning ‘baking aids’ including those containing glycerides, albeit together with saccharose — a foodstuff not contained in the products with which this case is concerned).

6. For that reason, by order of 27 November 1990, the Bundesfinanzhof stayed the proceedings and referred the following question to the Court for a preliminary ruling:

‘Must the Common Customs Tariff, Combined Nomenclature, be interpreted as meaning that emulsifiers intended for pastry dough and consisting essentially of sorbitol syrup (70% by dry weight) and monogfycerides and diglycerides are, as “mixtures” within the meaning of note 1(b) to Chapter 38, excluded from that chapter and fall under heading 2106?’

7. The order for reference was received at the Court Registry on 16 January 1991.

8. Pursuant to article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the defendant in the main proceedings, represented by Reinhart Pätsch, acting as Agent, and by the Commission of the European Communities, represented by Antonio Aresu, a member of its Legal Service, and Roberto Hayder, a national civil servant seconded to the Legal Service, acting as Agents.

9. 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 inquiry.

10. Pursuant to article 95(1) and (2) of the Rules of Procedure, the Court assigned the case to the Fourth Chamber.

III — Written observations submitted to the Court

1. The defendant sutes that it is disputed whether sorbitol, monoglyceride and diglyceride belong to the group of ‘substances with nutritive value’ as defined in note 1(b) to Chapter 38. The defendant contends that the question should be answered in the affirmative if those substances are metabolized in the same or a similar way as the components of ordinary food products and if they help, by the energy which they provide, to preserve human or animal life. In its view, that is the case both with sorbitol and with monoglyceride or diglyceride. Consequently, in its view, those substances have nutritive value.

(a) Sorbitol

Sorbitol is a sugar alcohol widespread in the vegetable kingdom. It differs from sugar, more precisely monosaccharides, only by the fact that there are two extra hydrogen atoms. Like sugar, it has an agreeably sweet flavour.

Sorbitol is found in particular in the fruit of the sorb tree (5-12%), in plums, apples, pears, peaches and apricots (1-5%). Concentrated pear juke and phim-based preparations contain highly enriched sorbitol (up to 20%).

By the action of a natural enzyme (sorbitol dehydrogenase), sorbitol changes in the liver of humans and mammals into fructose, which in turn may be either directly metabolized or converted into glycogen. Glycogen is a substance held in reserve, made up of units of glucose, present in the liver in particular, but also in other cells. The energy value of sorbitol, amounting to 17 kJ (4 kcal) per gramme, is equivalent to that of sugars.

Sorbitol has become very important in the food industry. It replaces ordinary sugars in food preparations for the following reasons:

1) Sorbitol taken orally is absorbed slowly in step with the digestive process and is slowly metabolized into glucose through the intermediate stages of fructose and glycogen, and is a substitute for sugar recommended for diabetics.

2) Since sorbitol is a considerably less favourable substrate for buccal bacteria than monosaccharide and disaccharide, sugar-free sweetened products containing sorbitol, which reduce tooth decay, have become very important. Sorbitol is suitable for the manufacture of sugar-free sweets and can be prepared directly in the form of tablets to suck.

Sorbitol is converted and broken down in the organisms of humans and animals by endogenous enzymes. Its calorific value of 17kJ (4 kcal) per gramme is equivalent to that of ordinary sugars. Like the latter, sorbitol is therefore a substance with nutritive value.

(b) Monoglycerides and diglycerides

The lipids used in foodstuffs are combinations of glycerine and fatty acids (esters). Glycerine is a trivalent alcohol. The three groups of alcohol are combined in lipids with fatty acids. That is why those substances are known as ‘triglycerides’.

In monoglycerides and diglycerides only one or two of the three alcohol groups are combined with the fatty acids. Since lipids are decomposed by hydrolysis on contact with water (the link between one or more alcohol groups and the fatty acids is dissolved), monoglyceride and diglyceride are often normal components of lipids in the natural state.

Lipids extracted from damaged seeds contain fatty acids in practically all cases, together with monoglycerides and diglycerides in the free state. It is well known that palm oil (a lipid extracted from the fruit of the palm tree known as Elaeis Guineensis) may, if special precautions are not taken during extraction, contain particularly large quantities of fatty acids and monoglycerides and diglycerides, owing to the fact that the fruit contain large quantities of enzymes which hydrolyse the lipids (lipases).

The defendant then explains how the hydroh/sing enzymes transform triglycerides, that is to say lipids, in the stomachs of human beings and animals.

The hydrolysed products are absorbed by the epithelial cells of the mucous in the small intestine either in the form of a water soluble combination of fatty acid — biliary acid and monoglyceride micelles, fatty acids and biliary salu, or in the form of very finely emulsified triglycerides and diglycerides.

The main meubolization occurs by degradation of the fatty acids resulting from the hydrolysis of monoglycerides, diglycerides and triglycerides according to the ‘ß oxidation’ principle. That is a very complex process. The main end product deriving from that oxidation is ‘activated acetic acid’ which is ‘burned’ at the end of the process, releasing vital energy.

Monoglycerides and diglycerides are substances which normally accompany lipids of vegetable origin. They are — like lipids in the stria sense — fatty acid esters of glycerine and the first intermediate products deriving from the natural breakdown of lipids in the organism.

In the case both of monoglycerides and diglycerides and of triglycérides, the energy gain occurs when those substances are broken down in the human and animal organisms by ‘combustion’ of the ‘activated acetic acid’ deriving from ß oxidation of the fatty acids.

The defendant considers, for all those reasons, that monoglycerides and diglycerides are, like triglycerides, substances (lipids) with nutritive value.

2. The Commission recalls that the preliminary question relates to the classification of various emulsifying agents used for the manufacture of bakery products (in particular biscuits) under tariff headings of the Combined Nomenclature, pursuant to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and the Common Customs Tariff. Those emulsifying agents are used in products prepared from sorbitol syrup, monoglycerides and diglycerides, and water, each of those products having added to it carotene oil as a colouring agent or propylene glycol. The Commission then explains that the preliminary question relates to the interpretation of note 1(b) to Chapter 38, namely the question whether the emulsifying agents used by the plaintiff must be regarded as mixtures of chemicals with foodstuffs or other substances with nutritive value of a kind used in the preparation of human foodstuffs. If that is the case, the emulsifying agents cannot be classified under tariff heading 3823. It would be possible, instead, to classify them under the residual heading 2106. The Commission bases its legal assessment on the fact that, according to the wording of the note, ‘mixtures’ must be regarded as preparations of substances for which both chemical products and foodstuffs or other substances with nutritive value are used. It is therefore necessary specifically to evaluate the components contained in the emulsifying agents. In the Commission's view, sorbitol syrup of a density of 70% dry matter and monoglycerides and diglycerides are chemicals. Those two categories of substances should be classified separately under tariff heading 3823. In the case of the sorbitol syrup used in the present case, that follows from subheading 382360 of the Nomenclature, ‘sorbitol other than that of subheading 290544, in aqueous solution’. In the Explanatory Notes to the Customs Cooperation Council, Harmonized System, to heading 3823, section B(5) covers inter alia sorbitol syrups of a sorbitol content between 60 and 80% dry extract, as in the present case. According to section B(ll) of the Explanatory Notes, mixtures of mono-, di- and tri-esters of fatty acids of glycerine, used as emulsifiers for fatty matter, are also to be classified under heading 3823. According to the Commission, those two categories of substances must likewise not be regarded as foodstuffs, since they come within sections I to IV of the Nomenclature, but also as foodstuffs or other substances with nutritive value' within the meaning of note 1(b) to Chapter 38. The Commission states that, in the 1950 Brussels Nomenclature used previously, that provision was worded so as to include ‘mixtures of chemicals and foodstuffs’. The Nomenclature Committee of the Customs Cooperation Council found, in its preparatory work on the Harmonized System, that the term ‘foodstuffs’ did not cover certain chemical substances with nutritive value such as sorbitol, for example. It was therefore decided to make changes to that provision — which thus came to be worded as now — so as also to include those substances. As regards sorbitol and mono-, di- and tri-, fatty acid esters of glycerol under heading 3823, a notice from the Scientific Subcommittee of the Customs Cooperation Council expressly confirmed the wider scope thus attributed in the version of note 1(b) to the term ‘other substances with nutritive value’. In the Commission's view, the question thus arises whether the term ‘mixture’ used in the note also covers preparations whose components display the two types of characteristics mentioned in the provision, namely those of chemicals and substances with nutritive value. There is no doubt, in that regard, that the product in question, namely emulsifying agents, is used for the preparation of food products intended for human consumption, in particular the manufacture of bakery dough. In the Commission's view, the aim of the provision requires, in this case, reliance on ‘mixture’ within the meaning of that provision, otherwise no account would be taken of one of the characteristics actually displayed by the components. That must be the case, a fortiori, as regards emulsifying agents containing additives, in so far as h is of little importance whether those additives are chemicals or substances with nutritive value. The Commission considers that the Customs Cooperation Council Explanatory Notes on heading 3823 confirm that interpretation. Those notes also include as preparations (chemical or otherwise) mixtures (including emulsions) or solutions. It is also made clear that heading 3823 does not include mixtures of chemicals and foodstuffs and other substances with nutritive value of the kinds used in the preparation of certain foodstuffs for human consumption or as components of those foodstuffs, or to improve certain of their characteristics, such as improvers for bakery, patisserie and biscuit making. The Commission emphasizes that the sentence introducing the various remarks contained in the Explanatory Notes which follow and relate both to sorbitol (paragraph 5) and glycerides (paragraph 11) also states that the substances listed can be included among the chemicals falling under that heading only if they are not inconsistent with the reservations formulated in the preliminary notes. It may thus be concluded that the use of the compounds contained in the emulsifying agents used for the preparation of foodstuffs does not justify the classification of those emulsifying agents under the residual heading 3823, ‘chemicals’. Since, in the present case, there is no question of specially classifying the emulsifying agents under the ‘foodstuffs’ tariff heading, it is necessary to have recourse to the residual heading 2106 mentioned in explanatory note 1(b) to Chapter 38. The Commission therefore proposes the following answer to the question submitted:

‘The Common Customs Tariff, Combined Nomenclature, must be interpreted as meaning that emulsifiers intended for pastry dough and consisting essentially of sorbitol syrup (70% by dry weight) and mono- and diglycerides are, as “mixtures” within the meaning of note 1(b) to Chapter 38, excluded from that chapter and fall within tariff heading 2106.’

IV — Oral procedure

At the hearing, the plaintiff in the main proceedings maintained that the products in question fail within Chapter 38 of the Common Customs Tariff.

M. Diez de Velasco

Judge-Rapporteur

1 Language of the case: German.