Opinion of the Advocate-General
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My Lords,
1. The present case is a reference for a preliminary ruling from the Bundesfinanzhof (Federal Finance Court, Germany). The reference is made in the context of a dispute between Felix Koch Offenbach Couleur und Karamel GmbH (hereafter "Felix Koch") and the Oberfinanzdirektion Muenchen (Principal Revenue Office, Munich). The dispute concerns the classification, for the purposes of the Common Customs Tariff, of a powder made from the flesh of coconuts which is used in the manufacture of food products. The question referred is the following:
"Is the Common Customs Tariff (combined nomenclature 1990) to be interpreted as meaning that 'coconut powder' consisting of a pasteurized, homogenized and subsequently spray-dried mixture of ground and pressed coconut mass to which maltose and sodium caseinate are added before it is dried in order to obtain the form of a powder, as more particularly described in the grounds [of the order for reference], to be classified under subheading 2106 90 99 as a 'food preparation not elsewhere specified or included (other)' ?"
2. The version of the combined nomenclature, established for the purposes of the Common Customs Tariff of the Community, which is currently in force is contained in Annex I of Commission Regulation (EEC) No 2505/92 of 14 July 1992.(1) It appears that, as far as the tariff headings at issue in the present proceedings are concerned, there is no difference between the current version of the Common Customs Tariff and the version in force in 1990 which is specified in the order for reference.
3. The coconut powder at issue (hereafter "the product") is obtained from a pasteurized mixture of ground and pressed coconut mass to which 8% maltose and 5% sodium caseinate are added before drying. The result is a powder with a 6.9% sucrose content by weight which is suitable for use in the manufacture of foodstuffs. The material from which the powder is made has a fibre content of only 0.15%, whereas the edible pulp of a coconut consists of approximately 3.3% raw vegetable fibre; the product itself contains virtually no fibre.
4. Subheading 2106 90 of the combined nomenclature ("Food preparations not elsewhere specified or included: ... - Other: ... - Other:") is divided into the two further subheadings:
"2106 90 91 -- 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
2106 90 99 -- Other".
It is clear that heading 2106 ("Food preparations not elsewhere specified or included") is a residual category which is of an extremely general character and which applies only to products which cannot be classified under any other heading applicable to food preparations. It is common ground that in the present case there are at most two possible alternative classifications: under subheading 1106 30 ("Flour, meal and powder of the products of Chapter 8"), and under subheading 2008 19 ("Fruits, nuts and other edible parts of plants, otherwise prepared or preserved ... not elsewhere specified or included: Nuts ... - Other ..."). For the purposes of applying subheading 1106 30, the relevant entries in Chapter 8 are the following:
"0801 Coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled:
0801 10 - Coconuts:
- Desiccated coconut
- Other".
5. Felix Koch maintains that the product should be classified under subheading 1106 30 of the combined nomenclature, since it is a powder of a product falling within subheading 0801 10, namely coconut pulp. In the view of the Commission, on the other hand, the product cannot be regarded as a pulverized form of a product falling within heading 0801, since the original fruit has been subject to processing operations which are not envisaged by that heading.
6. In my view that submission of the Commission is correct. Heading 0801 covers dried as well as fresh nuts, and includes those which have been shelled or peeled or subject to similar operations, but it is clear that it does not cover products which have been subject to more substantial forms of processing, other than certain treatments designed to preserve the product or maintain its appearance. Thus, Note 3 to Chapter 8 of the combined nomenclature states that:
"Dried fruit or dried nuts of this chapter may be partially rehydrated, or treated for the following purposes:
(a) for additional preservation or stabilization (e.g., by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate),
(b) to improve or maintain their appearance (e.g., by the addition of vegetable oil or small quantities of glucose syrup),
provided that they retain the character of dried fruit or dried nuts."
7. It will be recalled that, in the present case, the product is obtained by pressing coconut mass in order to remove the bulk of the fibre content of the original fruit. The product is pasteurized, and maltose and sodium caseinate are added, before it is finally dried and reduced to the form of a powder. It seems to me therefore that the original fruit, even before it has been dried and pulverized, has been processed in a manner which takes it outside the scope of Chapter 8.
8. That conclusion is confirmed by an examination of the Explanatory Notes to the Harmonized System published by the Customs Cooperation Council(2) which, as the Court has consistently held, must also be taken into account in interpreting the combined nomenclature.(3) Thus the third paragraph of the General Note to Chapter 8 states that:
"Fruit and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled."
None of those terms is apt to include an operation whereby the pulp of the fruit or nut is pressed in order to obtain an extract from which most of the vegetable fibre has been removed. Nor, moreover, can such an operation be regarded as a process akin to milling so as to bring the resulting powder within Chapter 11 of the combined nomenclature. As the General Note to Chapter 11 of the Harmonized System makes clear, that Chapter includes:
"(1) Products from the milling of the cereals of Chapter 10 and of sweet corn of Chapter 7 ... .
(2) Products also obtained from the cereals of Chapter 10 by submitting them to the processes provided for in the various headings of the Chapter, such as malting or the extraction of starch or wheat gluten.
(3) Products obtained by submitting raw materials of other Chapters (dried leguminous vegetables, potatoes, fruit, etc.) to processes similar to those indicated in paragraph (1) or (2) above."
It is not suggested that the present product is produced by a process which is in any way similar to malting or to the extraction of starch or wheat gluten.
9. I therefore reach the conclusion that subheading 1106 30 is not applicable in the present case. It must next be considered whether the product can be classified under heading 2008, which applies to:
"Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included."
10. The Commission submits that heading 2008 is inapplicable in the present instance for essentially the same reason that heading 1106 is inapplicable. Thus the Commission argues that the product cannot be regarded as a preparation of "fruit", because the coconut pulp from which it is made is pressed in order to remove the bulk of the fibre content before the product is subject to any further processing. In the view of the Commission, only a preparation which contains the entire pulp of the coconut can be classified as "fruit ... otherwise prepared or preserved" within heading 2008, rather than as a "food preparation" under the residual heading 2106.
11. The Commission argues that a distinction can be drawn between the present product and the substance classified under subheading 2008 19 90 by Commission Regulation (EEC) No 316/91.(4) The latter product is described in that regulation in the following terms:
"White pasty substance known as 'creamed coconut' manufactured by means of the fine grinding of coconut pulp and pasteurized."
The Commission suggests that such a substance is accurately described as a preparation of "fruit" because the entire fruit, with the exception of the shell, is prepared in the manner described. In the present case, in contrast, the bulk of the fibre content of the fruit is removed before any further processing takes place. In that respect, therefore, the product presently at issue is similar to the product ("coconut milk") recently classified under heading 2106 by Commission Regulation (EEC) No 1486/93.(5)
12. It seems to me that the Commission is correct to draw a distinction between a product obtained by preparing the entire pulp of the coconut, and a product which is prepared from coconut pulp only after the latter has been pressed in order to remove the bulk of the fibre content. A process which removes a major constituent of the fruit, such as its vegetable fibre, is not aptly described as leading to a "preparation" of the fruit. It is clear moreover that the constituents which remain cannot in themselves be described as "other edible parts of plants" for the purposes of heading 2008 (see paragraph 9 above).
13. On the other hand, as the Commission points out, there is no doubt that the product can be regarded as a "food preparation" for the purposes of heading 2106. It appears from the order for reference that Felix Koch argued in the main proceedings that the product is not a food preparation because it is used as an ingredient in the manufacture of food preparations rather than being independently consumed. However, according to the Explanatory Notes to the Harmonized System, heading 2106 ("Food preparations not elsewhere specified or included") covers in particular:
"(B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, lecithin, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.)."
It is clear therefore that, for the purposes of heading 2106, a product can be a "food preparation" even if it is used exclusively as an ingredient in the manufacture of other food preparations. As we have seen, the product presently at issue does not fall within any other category of food preparation included in the combined nomenclature; it follows therefore that it must be classified under heading 2106. Moreover, from a document produced by the Commission at the hearing, it appears that such a classification has already been unanimously accepted by the Nomenclature Committee.(6) Given that the product has a sucrose content of more than 5%, it must in particular be classified under subheading 2106 90 99.
Conclusion
14. I am accordingly of the opinion that the question referred by the Bundesfinanzhof should be answered as follows:
A substance consisting of a pasteurized, homogenized and subsequently spray-dried mixture of ground and pressed coconut mass to which maltose and sodium caseinate are added before it is dried in order to obtain a powder with a negligible fibre content and a sucrose content of at least 5% must be classified under subheading 2106 90 99 of the Common Customs Tariff.
(*) Original language: English.
(1) - OJ 1992 L 267, p. 1.
(2) - Harmonized Commodity Description and Coding System: Explanatory Notes (Customs Cooperation Council, Brussels).
(3) - See Case C-265/89 Vismans Nederland [1990] ECR I-3411, at paragraph 18 of the judgment, and see also Case C-318/90 Boehringer Mannheim [1992] ECR I-3495, at paragraph 14.
(4) - Commission Regulation (EEC) No 316/91 of 7 February 1991 concerning the classification of certain goods in the combined nomenclature (OJ 1991 L 37, p. 25.)
(5) - Commission Regulation (EEC) No 1486/93 of 16 June 1993 concerning the classification of certain goods in the combined nomenclature (OJ 1993 L 147, p. 8).
(6) - On the role of the Committee on Common Customs Tariff Nomenclature, which consists of Customs experts of the Member States, see Case 37/75 Bagusat v Hauptzollamt Berlin-Packhof [1975] ECR 1339, at paragraphs 5 to 7 of the judgment, and Vismans Nederland, cited above in note 3, at paragraph 13. The Committee was established by Council Regulation (EEC) No 97/69 of 16 January 1969 on measures to be taken for uniform application of the Common Customs Tariff (OJ, English Special Edition 1969 (I), p. 12).
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