Report for the Hearing in Case C-248/92

I — Facts and procedure

1 Legal framework

Heading 7211 and subheadings 72112100 and 721122 of Annex I to Commission Regulation (EEC) No 3174/88 of 21 September 1988 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1988 L 298, p. 1) refer to the following products:

‘7211 Flat-rolled products of iron or non-alloy steel, of a width of less than 600 mm, not clad, plated or coated: Not further worked than hot-rolled, of a thickness of less than 3 mm and having a minimum yield point of 275 MPa or of a thickness of 3 mm or more and having a minimum yield point of 355 MPa: (...) Other, not further worked than hot-rolled: 72112100 — — Rolled on four faces or in a closed box pass, of a width exceeding 150 mm and a thickness of not less than 4 mm, not in coils and without patterns in relief (ECSC) ... 721122 — — Other, of a thick ness of 4, 75 mm or more: 72112210 — — — Of a width exceeding 500 mm (ECSC) ... 72112290 — — — Of a width not exceeding 500 mm (ECSC) ...’ According to the Explanatory Notes to the Combined Nomenclature of the Common Customs Tariff (hereinafter ‘the Explanatory Notes to the CN’) relating to heading 7211, flat-rolled products in a form other than square or rectangular are excluded from that heading, even if their width is less than 600 mm. According to the first and second paragraphs of the explanatory notes to the Harmonized Commodity Description and Coding System (published by the Customs Cooperation Council and hereinafter referred to as ‘the Explanatory Notes to the Harmonized System’) relating to heading 72.11,‘This heading covers the same kind of products described in heading 72.08 or 72.09 but, to fall in this heading, they must be of a width of less than 600 mm. The provisions of the Explanatory Notes to headings 72.08 and 72.09 apply, mutatis mutandis, to products of this heading except those relating to width ...’. The 10th and 11th paragraphs of the Explanatory Notes to the Harmonized System relating to heading 72.08 provide that:‘For the purposes of this heading, “wide flats” are products of rectangular (other than square) cross-section, not in coils, hot-rolled on four faces in a closed box pass or universal mill, of a thickness of not less than 4 mm, and of a width of 600 mm or more but not exceeding 1250 mm. Therefore, “wide flats” have much straightcr and more accurately finished sides and sharper edges than those of “wide coil”, “sheets” or “plates”. They are never re-rolled but are used in structural steelwork, etc., without further machining of the edges.’

2 The main proceedings

The parties disagree as to the classification for customs purposes of a consignment of steel products imported into the Community from Poland in February 1989.

In the simplified declaration, the plaintiff, Jepsen Stahl GmbH (hereinafter ‘Jepsen Stahl’), described the goods, which had been manufactured in a universal rolling mill, as follows:

‘Flat-rolled products of non-alloy steel, of a width of less than 600 mm and a minimum yield point of less than 355 MPa, other, not further worked than hot-rolled on four faces or in a closed-box pass, of a width exceeding 150 mm and a thickness of 4 mm or more, not in coils, smooth’,

and placed them under sub-heading 72112100 of the Combined Nomenclature (hereinafter ‘the CN’).

In the course of an inspection of the goods the port customs authorities stated the following:

‘Upon visual examination, it is clear that the goods are flat-rolled products, of a width not exceeding 500 mm, with round edges, not rolled on four faces, and requiring import authorization.’

Despite that finding, Jepsen Stahl declared the goods in the regularizing general entry in the same terms as in the simplified declaration and itself calculated the import duties on the basis of a rate of 4.4%.

By a notice of alteration of duty dated 24 April 1989 the Hauptzollamt Emmerich (hereinafter ‘the Hauptzollamt’) sought post-clearance payment of the corresponding import duty from Jepsen Stahl, on the ground that the goods belonged under subheading 72112290, to which a rate of 5.3% was applicable. Because the tariff classification had been altered, Jepsen Stahl was also required to apply for import authorization for the steel goods in question. Jepsen Stahl lodged an objection against that decision; the objection was rejected by the Hauptzollamt by a decision of 3 November 1989.

Jepsen Stahl disagreed with the tariff classification applied by the Hauptzollamt Emmerich and brought an action before the Finanzgericht Düsseldorf against the notice of alteration of duty and the rejection of its objection.

Jepsen Stahl considers that in view of their manufacturing process the imported goods are flat-rolled products rolled on four faces (known as ‘wide flats’). In that regard it relies, first of all, on the purpose of the goods. Furthermore, the fact that the edges of the steel plates are slightly rounded does not prevent their being classified under subheading 72112100. The ‘rough rolled edges’ are inevitable and typical of goods rolled in a universal mill.

According to the Hauptzollamt, the classification of goods for tariff purposes depends in principle on their objective characteristics at the material time. The manufacturing process constitutes a criterion for classification only where the common customs tariff expressly so provides; furthermore, it must be possible to ascertain that process from the product concerned, that is, purely on the basis of the result of the process. The steel products in question were not rolled on four faces, and only products with sharp edges could be regarded as ‘wide flats’. The Hauptzollamt relies on the explanatory notes to heading 7211 (it refers to the notes published by the German Finance Ministry, which are identical to those set out above), and Euronorms 91-81 and 79-82.

3 The question referred to the Court

Since it considered that the point at issue depended on the interpretation of the characteristic of having been ‘rolled on four faces’ where the goods had been rolled in a universal mill, the Finanzgericht Düsseldorf took the view that the dispute raised problems of the interpretation of Community law and decided to refer the following question to the Court for a preliminary ruling:

‘Is subheading 7211 2100 of the Combined Nomenclature, as set out in Annex I to Regulation (EEC) No 3174/88, to be interpreted as meaning that the characteristic of having been “rolled on four faces” relates only to the circumstances of the product's manufacture, or is it a further requirement that the rolling on four faces shall result in a distinctive profiling of the product, namely sharp edges to all rolled faces?’

4 Procedure

The order of the Finanzgericht Düsseldorf was lodged at the Court Registry on 27 April 1992.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 28 August 1992 by the defendant, represented by Christian Schulz-Loerbroks, Regicrungsdirektor, Oberfinanzdirektion Düsseldorf, acting as Agent, and on 17 September 1992 by the Commission of the European Communities, represented by Richard Wainwright, Legal Adviser, and A. Bardcnhcwcr, of its Legal Service, assisted by Hans-Jürgen Rabe, 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. By decision of 8 March 1993 the case was assigned to the Fourth Chamber.

II — Summary of the written observations submitted to the Court

According to the defendant, the Explanatory Notes to the Harmonized System on headings 72.08 and 72.11 give specific form to heading 72.11 when they state that wide flats are also covered by that heading. Wide flats are defined in Euronorm 91-81 — as well as in the Explanatory Notes. Euronorm 91-81 provides a precise description of the appearance required of a wide flat. In order to be classified under subheading 72112100 it is not sufficient that a product has been ‘rolled on four faces’ in a universal mill. The clarification of the Customs Tariff provided by the Explanatory Notes and the Euronorms runs counter to the argument advanced by the Finanzgericht.

The English version of subheading 7211 2100 must also be taken into account:

‘— Other, not further worked than hot-rolled: 72112100 — — Rolled on four faces or in a closed-box pass, ...’

That wording shows that what matters is the result of the process and not the process actually carried out.

The Commission observes that, according to the case-law of the Court, in the interest of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the Common Customs Tariff and the notes to the sections or chapters (Case 36/71 Henck ν Hauptzollamt Emden [1972] ECR 187). Manufacturing processes of a product are decisive only when the relevant subheading expressly so provides (Case 40/88 Weber ν Milchwerke Paderborn-Rimbeck [1989] ECR 1395). It is in this context that the fundamental importance of the objective characteristics and properties of the product must be considered as criteria for classification. It follows that the presence of these objective characteristics is decisive where the manufacturing process may be ascertained from the product in question.

By the formula ‘rolled on four faces’ subheading 72112100 refers expressly to the manufacturing process of the steel products. It is therefore a decisive criterion for classification.

According to the Explanatory Notes to the Harmonized System (10th and 11th paragraphs of the notes to heading 72.08 in conjunction with the first and second paragraphs of the notes to heading 72.11), subheading 72112100 also covers products rolled on four faces in a universal mill. Although universal mills are no longer used in industrial countries, they are still used in Poland. Products manufactured in this way have always been rolled on four faces. Because the place of manufacture of the goods and also the manufacturing process which is necessarily used there are known, it is permissible to conclude in this case that the product was in fact rolled on four faces within the meaning of subheading 72112100 and that the criterion for classification at issue was therefore satisfied.

Neither subheading 72112100 nor the Explanatory Notes to heading 7211 provide that the presence of the criterion at issue in this case depends on ‘sharp edges’ within the meaning of the Euronorms. The formula used does not state precisely what is meant by ‘sharp edges’. A universal mill operates in such a way that the lateral faces are rounded, the so-called rough rolled edges, which are the typical and practically inevitable characteristic of a product rolled on four faces in a universal mill. The objective characteristics of the imported product do not therefore prevent its being classified under subheading 72112100. The Euronorms to which the Hauptzollamt refers concern the more modern manufacturing techniques used in the Community: they cannot constitute a criterion in this case.

The Commission suggests that the question should be answered as follows:

‘Subheading 72112100 of the Common Customs Tariff is to be interpreted as meaning that the characteristic “rolled on four faces” refers in principle only to the method of manufacturing the product; the objective characteristics and properties of the product cannot exclude the use of a particular manufacturing process (in this case rolling in a universal mill). The classification of the product under this subheading does not presume the presence of sharp edges on all the rolled surfaces.’

P. J. G. Kapteyn

Judge-Rapporteur

1 Language of the case: German.