Report for the Hearing in Case C-177/91

I — Legal background

Heading 13.02 of the Annex to Commission Regulation (EEC) No 2886/89 of 2 August amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1989 L 282, p. 1), (hereinafter ‘the Annex’) refers to ‘vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products’.

Notes 1(d) and (f) at the head of Chapter 13 of the said Annex exclude from that heading ‘vegetable saps or extracts constituting alcoholic beverages or compound alcoholic preparations of a kind used for the manufacture of beverages’ and ‘medicaments of heading 30.03 or 30.04’ respectively.

Heading 22.08 includes:

‘undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol. spirits, liqueurs and other spirituous beverages; compound alcoholic preparations of a kind used for the manufacture of beverages’;

subheading 22.08.90.59 covers, by exclusion,

‘other ... spirituous beverages in containers holding more than 2 litres’.

According to Note 14 of the Explanatory Notes to the Harmonized System of the Common Customs Tariff (hereinafter the ‘Explanatory Notes’) heading 22.08 includes:

‘spirituous beverages, sometimes referred to as food supplements, designed to maintain general health or well-being. They may, for example, be based on extracts from plants, fruit concentrates, lecithins, chemicals, etc., and contain added vitamins or iron compounds.’

In addition, headings 30.03 and 30.04 of the Annex include:

‘medicaments ... consisting of ... constituents which have been mixed together for therapeutic or prophylactic uses’,

whether they are (30.04) or are not (30.03) put up in measured doses or in forms or packings for retail sale.

In this connection it appears from Note 1(b) to the explanatory notes to heading 30.04 that:

‘This heading covers medicaments consisting of mixed or unmixed products, provided they are in packings for retail sale for therapeutic or prophylactic use. This refers to products (for example, sodium bicarbonate and tamarind powder) which, because of their packing and, in particular, the presence of appropriate indications (statement of disease or condition for which they are to be used, method of use or application, statement of dose, etc.) are clearly intended for sale directly to users (private persons, hospitals, etc.) without repacking, for the above purposes.’

Finally, according to Commission Regulation (EEC) No 1422/90 of 23 May 1990 concerning the classification of certain goods in the combined nomenclature (OJ 1990 L 137, p. 5) certain products which are not prepared ‘for therapeutic or prophylactic purposes’ are to be considered to be food supplements and not medicaments (heading 21.06).

II — Background to the dispute and procedure

1. The main proceedings are based on the action brought by Bioforce GmbH, the plaintiff in the main proceedings, before the court of reference, the Bundesfinanzhof (Federal Finance Court) against a customs tariff ruling binding the customs administration, given by the Oberfinanzdirektion München (Regional Tax Office, Munich), the defendant in the main proceedings, and concerning the classification of ‘Weissdorn-Tropfen’ (hawthorn drops) in the combined nomenclature of the Common Customs Tariff.

2. The preparation in question is an extract of a medicinal plant, hawthorn, which may be taken drop by drop in an alcoholized form (with 45.9% vol. of alcohol) as a tonic. On the packaging of the product it is stated that the tonic is indicated:

‘for treatment of the heart and to aid cardiac irrigation ... encourages cellular activity in the cardiac muscle, thus improving the blood supply to the coronary vessels’.

3. The defendant in the main action had excluded this product from classification as a medicament as, in its opinion, it lacked the necessary specific medical indications as the description did not mention the prevention or treatment of illnesses.

4. The plaintiff in the main action claimed before the court of reference that its preparation must be classified under heading 30.04 because it was a medicament recognized by the rules on medicaments and authorized by the Bundesgesundheitsamt (Federal Health Department). It is used both for prophylaxis (prevention) and therapy (treatment) and according to the specialized documentation the indications are, inter alia, reduced cardiac capacity in the case of heart disease, difficulty in breathing or feeling of tightness round the heart and mild arrhythmia.

5. The Bundesfinanzhof, on the basis of the finding that the aforesaid Regulation No 1422/90 considers not as medicaments, but as products coming under the residuary heading 21.06 (‘food preparations not elsewhere specified or included’), certain preparations not having a specific action or being prepared for therapeutic or prophylactic purposes, considered that there remained nevertheless a doubt about the tariff classification of products which, on the one hand, cannot be assimilated to such products but, on the other hand, cannot be assimilated either to medicaments acting against a certain more serious state of ill health or to prevent such a state, as is the case with the defendant's Weissdorn-Tropf en, the indications for which are very general and, in any case for certain persons, do not necessarily correspond to illnesses.

6. Taking the view that the dispute before it raised a question of Community law, the Bundesfinanzhof requested the Court to give a ruling on the following questions: The question raised by the Bundesfinanzhof was lodged at the Court Registry on 8 July 1991. Pursuant to Article 20 of the Protocol of the Statute on the Court of Justice of the EEC, written observations were submitted by Bio-force GmbH, represented by Berthold Widemann, Rechtsanwalt, and by the Commission of the European Communities, represented by Blanca Rodríguez-Galindo and Roberto Hayder, acting as Agents. 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 and to assign the case to the Fourth Chamber.

‘1. Is the Common Customs Tariff — Combined Nomenclature 1990 — to be interpreted as meaning that products such as “Weissdorn-Tropfen” (extract of hawthorn with 45.9% vol. alcohol, used as a tonic (for the heart)) must be classified under heading 30.04 — medicaments consisting of ... unmixed products for therapeutic or prophylactic uses, put up ... — for retail sale?

2. In the event of a negative answer to the previous question, is the Common Customs Tariff to be interpreted as meaning that products such as those referred to in the previous question must be classified in subheading 22.08.90.59 amongst the “other” spirituous beverages?’

III — Written observations submitted to the Court

1. Bioforce GmbH, the plaintiff in the main proceedings, starts by stressing that Weissdorn-Tropfen, from their external presentation, show in several ways and without ambiguity (see inter alia packaging, notice, dose, bottle) that they must be a medicament and neither a food supplement or spirituous beverage nor, as observed by the Bundesfinanzhof, a plant or vegetable extract for medicinal uses. It stresses in that respect the fact that the indications are given as treatment of the heart, aiding cardiac irrigation, encouraging cellular activity of the cardiac muscle and improving the blood supply to the coronary vessels. The plaintiff company quotes in support of that statement several documents of a medical nature and in particular the Lehrbuch der Phytotherapie (Fifth Edition, Hippokrates Verlag, Stuttgart), by Dr Rudolf Weiss (specialist in internal diseases), which gives on page 194 the following summary: It therefore deduces that, regard being had both to the manner in which the product in question is developed and presented and to the Explanatory Notes to the Harmonized System, relating to heading 30.04 under (b), first and third paragraphs (marginal numbers 04.0 and 06.0 in the German version), the wording of which is decisive, ‘Weissdorn-Tropfen’ are, within the meaning of the Harmonized System, medicaments consisting of unmixed products for therapeutic, but above all prophylactic uses, put up for retail sale, unless it is desired to consider the liquid remedy accompanied by an indication of dosage as put up ‘in measured doses’ within the meaning of the tariff heading. In any event, the ‘Weissdorn-Tropfen’ are not, either, ‘other spirituous beverages’ within the meaning of heading 22.08 of the Harmonized System or in particular under Note 14 (marginal number 21.0 of the German version) of the Explanatory Notes, because they are intended not to ‘maintain general health’ but at least for prophylactic purposes for certain cardiac afflictions, since the alcohol contained in the preparation is not a characteristic of the product, but represents simply an adjuvant, an excipient, a preservative and a base for the active principles. The medical nature of the product at issue is confirmed in so far as an analysis of heading 30.03, which is similar to heading 30.04, also shows clearly that the Weissdorn-Tropfen are to be regarded as a medicament in so far as the wording (apart from certain not very import differences) is similar and as the notes state that medicinal preparations used for therapeutic or prophylactic purposes inhuman or veterinary medicine (first paragraph, marginal number 01.0 in the German text) and medicinal mixtures of vegetable extracts, including those obtained directly from treatment of a mixture of plants (paragraph 5, marginal number 08.0 of the German text) come within the concept of medicaments within the meaning of heading 30.03. Similarly the Explanatory Notes relating to heading 30.03 (‘... do not remove the nature of the product as a food preparation’) (marginal number 18.0 of the German text) also militate against the classification of the drops in question as a spirituous beverage or a food preparation in view of the fact that the drops have not the nature of a food preparation. The plaintiff in the main proceedings claims that the drops in question contain active ingredients (such for example as hyperoside/flavones) specific to a particular illness (cardiac disease) and that a few drops are sufficient where used to reach the effective dose (20 drops correspond to one or two tablets). In that respect it appears clearly from the wording of headings 30.03 and 30.04 of the Harmonized System that in order to check whether a preparation constitutes a medicament it is not the description but the objective content which is significant since medicaments prepared for therapeutic or prophylactic purposes are at issue. According to the plaintiff in the main proceedings, the Court of Justice has already expressed that point of view according to which the objective characteristics and properties of a product constitute the decisive criterion for its tariff classification (judgment in Case 40/88 Weber v Milchwerke Paderborn-Rimbeck [1989] ECR 1395). In the opinion of the plaintiff in the main proceedings it follows also from the wording of Commission Regulation No 1422/90 of 23 May 1990 that there too the basis taken is the objective content rather than other specific features of an object to be classified in so far as, for example, concerning heading 21.06 (for example in relation to garlic powder), it is stated that that product is not prepared for therapeutic or prophylactic purposes. As regards specifically the written customs tariff ruling binding the customs administration, dated 21 January 1990 on Bioforce GmbH's Weissdorn-Tropfen, the plaintiff remarks that the Oberfinanzdirektion München speaks of a ‘reddish-brown alcoholized liquid, slightly cloudy, having a bitter taste’ without, however, any mention of the active ingredients and therefore in particular not the decisive flavonoids or hyperoside. It was precisely because of that limited description that the Bundesfinanzhof could not reach the conclusion desired by the plaintiff (recognition of the product at issue as a medicament). The plaintiff in the main proceedings continues by emphasizing that as hawthorn is incontestably one of the best known and most widely-used natural remedies in medicine, it represents a real symbol of the importance and justification for phytotherapy and physiotherapy in general. After referring once more to the Lehrbuch der Phytotherapie, the plaintiff in the main proceedings states that in Germany phytotherapy is represented by the Gesellschaft für Phytotherapie, Rudolf-Strasse D-8958 Füssen, whose ‘officiai publication’ entitled Zeitschrift für Phytotherapie, appears twice a month at the Hippokrates Verlag, Stuttgart, that the directors of the publication are well-known teachers of medicine, a number of whom are also part of the editorial staff and the scientific committee. Moreover, the fact that the European Scientific Co-operative for Phytotherapy (ESCOP) is an international organization makes it possible to conclude that phytotherapy must be recognized in general and internationally as a therapeutic process which must be taken seriously. It therefore appears to the plaintiff in the main proceedings that it is unjustified to discriminate against producers, distributors and users of therapeutic remedies and medicaments as compared with producers, distributors and users of chemical pharmaceutical products and medicaments. It contends in particular that in the event of a possible classification of therapeutic medicaments and consequently also of the plaintiff's Weissdorn-Tropfen under heading 21.06, 22.08 or 12.11, importers distributing phytotherapeutic products would be obliged to pay in customs duties an amount almost ten times higher than in the event of classification under heading 30.03 or 30.04 which, for an undertaking like the plaintiff's, operating to a considerable extent in the field of phytotherapy, would involve an excessive monthly and annual customs surcharge. Classification of the plaintiff's Weissdorn-Tropfen under heading 21.06, 21.08 or 12.11 of the Harmonized System would therefore involve a breach of the principle of equal treatment as compared with distributors of imported chemical medicaments. According to the plaintiff, such a classification should at the same time be regarded as discrimination against the importers, distributors and users of imported phytotherapeutic products. Bioforce GmbH ends by drawing attention to the contradiction existing, in its view, between the first Conned Directive of 26 January 1965 on the approximation of provisions laid down by law, regulation or administrative action relating to proprietary medicinal products (Directive 65/65/EEC, OJ, English Special Edition 1965-1966, p. 20) and the intentions behind the classification made by the defendant in the main proceedings (the Oberfinanzdirektion), that is to say, aiming to treat Weissdorn-Tropfen as a food preparation or a spirituous beverage (or, according to the observation of the Bundesfinanzhof, as a plant or part of a plant). The directive calls for the removal of hindrances to trade in proprietary medicinal products within the Community. However, a proprietary medicinal product is considered to be ‘any ready-prepared medicinal product placed on the market under a special name and in a special pack’. In case of doubt it would however be appropriate to recognize Weissdorn-Tropfen as a proprietary medicinal product and consequently to treat them as a medicament if, contrary to what is required, according to the plaintiff, the said drops were not to be regarded from the outset as a medicinal product within the meaning of Article 1(2) of the said directive.

‘It cannot therefore be disputed that present degenerative diseases of the heart represent the principal field for the administration of hawthorn ... amongst them being coronary sclerosis, angina pectoris and all states which cannot yet be regarded as states of ill health, but where there is already a reduction in capacity owing to ageing’.

2. The Commission first states that it shares the opinion of the court of reference in making a distinction between the tariff classification of a preparation and its description according to the rules on medicinal preparations. In particular, a preparation regarded as a medicinal product under the rules on medicinal products need not necessarily be regarded as such by the customs tariff. The Commission next observes that the case-law of the Court relating to the definition of proprietary medicinal products referred to in Council Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by law, regulation or administrative action relating to proprietary medicinal products (OJ, English Special Edition 1965-1966, p. 20) which, having regard to the primary aim of health protection, subjects a relatively wide series of products to the system of monitoring and protection established by the legislation on medicinal products, and is different from the tariff approach in so far as, according to the Court's consistent case-law, the classification of a product in the Common Customs Tariff is effected on the basis of the product's objective qualities. Moreover that distinction is reflected in the general considerations to Chapter 30 —‘Pharmaceutical products’ — of the Explanatory Notes to the Combined Nomenclature of the Common Customs Tariff, stating that for classification in that chapter the description of a product as a medicament in Community legislation (other than that relating to classification in the combined nomenclature) or in the national legislation of the Member States or in any pharmacopoeia is not the deciding factor. It follows, according to the Commission, that the fact that the Weissdorn-Tropfen at issue are described as a medicinal product and authorized as such in the Federal Republic of Germany under German legislation on medicinal products has no legally binding evidential value for their tariff classification. On the contrary it is appropriate to enquire whether, in accordance with the wording of heading 30.04, the Weissdorn-Tropfen consist ‘of ... products for therapeutic or prophylactic uses’. In so far as the answer to this question depends on whether, by its therapeutic or prophylactic action, the preparation in question serves specifically for the treatment or prevention of a given illness, it must be stated that although it is true that hawthorn extracts are used in the manufacture of various medicinal products with a specific action, the position nevertheless remains that such extracts do not themselves have a therapeutic action against certain cardio-vascular ailments. The Commission thinks, in short, that even if the plaintiff's Weissdorn-Tropfen comply with the requirements of heading 30.04 as regards their packing or packaging, as seems to be the case according to the photocopies of the packaging of the preparation contained in the file accompanying the order for reference, that is, are put up as a medicament, that by no means implies that they have an effect specific to themselves. It must be recalled in that respect that it appears clearly from Note 1(b) relating to heading 30.04 of the Harmonized System that the packaging of a medicament cannot be judged independently of its intended therapeutic or prophylactic use. In the Commission's view, the foregoing does not however preclude the possibility that the Weissdorn-Tropfen may have in general a tonic effect on the heart and circulation and that from that point of view they may be comparable to ginseng-based products. It follows that, like them, Weissdorn-Tropfen are not to be regarded as medicaments within the meaning of headings 30.03 and 30.04. The Commission considers in that respect that the product in question must be classified under heading 22.08 and that heading 13.02 must be excluded by reason of the alcoholic content of the Weissdorn-Tropfen. According to the Commission, the description contained in Note 14 to the Harmonized System applies to Weissdorn-Tropfen whose alcohol content is less than the fixed ceiling of 80% vol., and the fact that the preparation in question is consumed in the form of drops does not preclude classification as a spirituous beverage in Chapter 22 of the Combined Nomenclature. In support of that statement, it refers to the judgment in Case 114/80 Ritter v Oberfinanzdirektion Hamburg [1981] ECR 895, in which the Court stated, in the case of a non-alcoholic beverage, that the concept of beverage must be determined on the basis of criteria which are both objective and verifiable, and its classification must not depend on the manner in which a product is taken or the purpose for which it is consumed. As the Weissdorn-Tropfen do not come under any of the specific subheadings of heading 22.08 (spirits, whiskies and the like), classification in subheading 22.08.90.59, which comprises ‘Other spirituous beverages, in containers holding’ less than 2 litres cannot finally be contested. It is therefore pointless to have recourse to the residual heading 21.06, which might in itself be considered for a food supplement, but the terms of which make it clear that it concerns only food preparations not mentioned or included elsewhere. The Commission, having regard to the foregoing considerations, suggests that the Court should give the following answers to the questions referred to it for a preliminary ruling:

‘1. The Common Customs Tariff, in the version in force in 1990, must be interpreted as meaning that “Weissdorn-Tropfen” — composed of an extract of hawthorn with 45.9% vol. of alcohol and used as a tonic — must not be classified under heading 30.04.

2. The products described under 1. are to be classified under heading 22.08 of the Common Customs Tariff as other spirituous beverages; in containers holding 2 litres or less’.

Diez de Velasco

Judge-Rapporteur

1 Language of the case: German.