Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
Common Customs Tariff - Tariff headings - Uninterruptible power supply - Classification under subheading 85.01.B.II
Summary
An electrical apparatus which is an `uninterruptible power supply' consisting, on the one hand, of a cabinet containing a rectifier/charger, an inverter and a static bypass switch and, on the other, of a cabinet housing a sealed lead-acid accumulator battery must be classified under tariff subheading 85.01.B.II as `transformers, static converters, rectifiers and rectifying apparatus'. General Rule 3(b) on the interpretation of the nomenclature of the Common Customs Tariff provides that the classification of products made up of different components depends on the material or component which gives them their essential character. Since the product in dispute is designed to regulate and ensure a permanent power supply, it is the rectifier/charger cabinet which confers on it its essential character, whereas the accumulator cabinet is of only secondary importance.
Parties
In Case C-105/96,
REFERENCE to the Court under Article 177 of the EC Treaty by the Supremo Tribunal Administrativo for a preliminary ruling in the proceedings pending before that court between
Codiesel - Sociedade de Apoio Técnico à Indústria Ld°
and
Conselho Técnico Aduaneiro
also represented: Ministério Público
on the interpretation of Council Regulation (EEC) No 950/68 of 28 June 1968 on the Common Customs Tariff (OJ, English Special Edition 1968(I), p. 275), as amended by Council Regulation (EEC) No 3331/85 of 5 December 1985 (OJ 1985 L 331, p. 1),
THE COURT
(First Chamber),
composed of: L. Sevón, President of the Chamber, D.A.O. Edward (Rapporteur) and P. Jann, Judges,
Advocate General: N. Fennelly,
Registrar: R. Grass,
after considering the written observations submitted on behalf of:
- Codiesel - Sociedade de Apoio Técnico à Indústria Ld°, by João Teixeira Alves, of the Lisbon Bar;
- the Portuguese Government, by Luís Fernandes, Director of the Legal Service in the European Communities Directorate-General at the Ministry of Foreign Affairs, and Rui Barreira, Adviser to the Legal Studies Centre of the Presidency of the Council of Ministers, acting as Agents;
- the Commission of the European Communities, by Francisco de Sousa Fialho, of its Legal Service, acting as Agent,
having regard to the report of the Judge-Rapporteur,
after hearing the Opinion of the Advocate General at the sitting on 24 April 1997,
gives the following
Judgment
Grounds
1 By order of 28 February 1996, received at the Court on 1 April 1996, the Supremo Tribunal Administrativo (Supreme Administrative Court) referred for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of Council Regulation (EEC) No 950/68 of 28 June 1968 on the Common Customs Tariff (OJ, English Special Edition 1968(I), p. 275), as amended by Council Regulation (EEC) No 3331/85 of 5 December 1985 (OJ 1985 L 331, p. 1, hereinafter `the Nomenclature').
2 Those questions have arisen in a dispute between Codiesel - Sociedade de Apoio Técnico à Indústria Ld°, a company established under Portuguese law (hereinafter `Codiesel'), and the Conselho Técnico Aduaneiro (Customs Examination Board) in regard to the tariff classification of an electrical apparatus which constitutes a UPS (uninterruptible power supply) consisting of two cabinets (hereinafter `the product in dispute'). The first cabinet consists of a rectifier/charger which feeds power from networks to an inverter and powers a battery, a DC/AC inverter which converts the current into regulated alternating current, and a static bypass switch allowing surges to be absorbed without overcharging (hereinafter `the rectifier/charger cabinet'). The second cabinet houses a sealed lead-acid accumulator battery which can operate independently for 30 minutes (hereinafter `the accumulator cabinet').
3 Tariff subheading 85.01.B.II, which forms part of Chapter 85 of Section XVI of the Nomenclature (`Machinery and mechanical appliances; electrical equipment, parts thereof') is worded as follows:
`85.01 Electrical goods of the following descriptions: generators, motors, converters (rotary or static), transformers, rectifiers and rectifying apparatus, inductors:
A. The following goods, for use in civil aircraft (a):
...
B. Other machines and apparatus:
I. Generators, motors (whether or not equipped with speed reducing, changing or set-up gear) and rotary converters:
...
II. Transformers, static converters, rectifiers and rectifying apparatus; inductors'.
4 This subheading of the Nomenclature was subdivided for statistical purposes by application of Commission Regulation (EEC) No 3631/85 of 23 December 1985 amending the nomenclature of goods for the external trade statistics of the Community and statistics of trade between Member States (Nimexe) (OJ 1985 L 353, p. 1, hereinafter `Nimexe'). Statistical subheading 85.01.B.II.f of tariff subheading 85.01.B.II includes `static converters, rectifiers and rectifying apparatus'.
5 In addition, subheading 85.04.B.I, which also features in Chapter 85 of Section XVI of the Nomenclature, is worded as follows:
`85.04 Electrical accumulators:
A. For use in civil aircraft (a)
B. Other: I. Lead-acid accumulators
...'.
6 Finally, according to the General Rules on the interpretation of the Nomenclature, which feature in Section I thereof,
`...
3. When for any reason goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable.'
7 On 20 May 1986, Codiesel imported the product in dispute from France and declared it under tariff subheading 90 28 180 000 T of the Portuguese nomenclature (`other electronic apparatus for measuring electrical quantities'), corresponding to tariff subheading 90.28.A.II.a of the Nomenclature and, more particularly, statistical subheading 90.28.A.II.a.5 of Nimexe.
8 The Examiner, Supervisory Examiner and, by a majority of its members, the Conference of Supervisory Examiners (Conferência dos Reverificadores) classified the product in dispute under tariff subheading 90 28 380 000 D of the Portuguese nomenclature (`regulators'), corresponding to tariff subheading 90.28.A.II.b of the Nomenclature and, more particularly, to statistical subheading 90.28.A.II.b.2 of Nimexe.
9 Codiesel thereupon amended the classification of the product in dispute, taking the view that the heading under which it came was subheading 84 53 890 900 C of the Portuguese nomenclature (`Automatic data-processing machines and units thereof: magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: other; automatic data-processing machines and units thereof: digital machines: other: peripheral units, including control and adapting units (connectable directly or indirectly to the central unit): other'). This latter subheading corresponds to tariff subheading 84.53.B of the Nomenclature and, more particularly, to statistical subheading 84.53.B.I.b.2.cc.33 of Nimexe.
10 Following technical appeal proceedings, the Tribunal Técnico Aduaneiro de Primera Instância (Specialized Customs Court of First Instance) and subsequently the Tribunal Técnico Aduaneiro de Segunda Instância (Specialized Customs Court of Second Instance), by decisions of 30 July 1986 and 28 June 1988, allocated the following classifications to the two cabinets: statistical subheading 85.01.B.II.f for the rectifier/charger cabinet, in its capacity as a static converter, and tariff subheading 85.04.B.I for the accumulator cabinet, in its capacity as a lead-acid accumulator.
11 In view of the fact that the Tribunal Tributário de Segunda Instância (Tax Court of Second Instance), ruling on 31 May 1994, had upheld the decision of 28 June 1988, Codiesel appealed to the Supremo Tribunal Administrativo, which, taking the view that the dispute raised questions of interpretation of Community law, decided to stay the proceedings and refer the following questions to the Court:
`1. Having regard to the facts held to be proved in part 3 of this judgment (above all those set out in paragraphs A to D and L, commencing on p. 7 and ending on p. 12) and the applicable Community provisions, is the dual tariff classification assigned to the goods in question by the Tribunal Técnico de 1° Instância and later confirmed by the Tribunal Técnico de 2° Instância and the Tribunal Tributário de 2° Instância correct?
2. If not, what is the proper tariff classification?'
12 It should be noted at the outset that Article 177 of the Treaty is based on a clear separation of functions between national courts, on the one hand, and the Court of Justice, on the other, and that the latter is empowered solely to rule on the interpretation or validity of a Community measure on the basis of the facts indicated to it by the national court (see, in particular, Case 167/84 Hauptzollamt Bremen-Freihafen v Drünert [1985] ECR 2235, paragraph 12).
13 However, in the event of questions having been improperly formulated or going beyond the scope of the powers conferred on it by Article 177, the Court is free to extract from all the factors provided by the national court, and in particular from the statement of the grounds contained in the reference, the elements of Community law requiring an interpretation - or, as the case may be, an assessment of validity - having regard to the subject-matter of the dispute (see Case 83/78 Pigs Marketing Board v Redmond [1978] ECR 2347, paragraph 26).
14 In the main proceedings in this case, it must be borne in mind, in the first place, that it follows from the facts as established by the national court that the rectifier/charger cabinet consisting of a rectifier/charger, an inverter and a converter would in itself be treated as a static converter and would be classified under tariff subheading 85.01.B.II of the Nomenclature.
15 Second, it is common ground that, presented in isolation, the accumulator cabinet housing a sealed lead-acid accumulator battery ought to be regarded as a lead-acid accumulator within the meaning of tariff subheading 85.04.B.I.
16 It follows that, by its questions, the Supremo Tribunal Administrativo is asking essentially whether the Nomenclature, as well as tariff subheadings 84.53.B, 85.01.B.II and 85.04.B.I, are to be construed as meaning that an electrical apparatus which constitutes an `uninterruptible power supply' consisting, on the one hand, of a cabinet containing a rectifier/charger, an inverter and a static bypass switch, and, on the other, of a cabinet containing a sealed lead-acid accumulator battery is to be classified under one or several of those tariff subheadings of the Nomenclature.
17 The Court has consistently held that, in the interests 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 relevant headings of the Common Customs Tariff and the notes to the sections or chapters. Likewise, for the purpose of interpreting the Common Customs Tariff, both the notes which head the chapters of the Common Customs Tariff and the Explanatory Notes to the Nomenclature of the Customs Cooperation Council are important means for ensuring the uniform application of the Tariff and as such may be regarded as useful aids to its interpretation (see Case C-121/95 VOBIS Microcomputer v Oberfinanzdirektion München [1996] ECR I-3047, paragraph 13).
18 It is therefore first necessary to examine whether an electrical apparatus such as the product here in dispute falls to be classified in the Nomenclature pursuant to General Rule 3(b), cited in paragraph 6 of this judgment, and, if necessary, to determine the essential character of that product.
19 In this regard, Codiesel, basing itself on the conclusions of an expert technical opinion which it submitted to the Court, takes the view that the two cabinets contain an inseparable unit - the sole and indivisible function of which is to regulate and safeguard the power supply for computers - and that, in accordance with General Rule 3(b) and Note 3 to Section XVI of the Nomenclature, the tariff classification must be made taking that function into account.
20 In the view of the Portuguese Government, the dual tariff classification accepted by the various Portuguese courts should be retained. General Rule 3(b) of the Nomenclature applies only if there is an essential character which makes a joint determination possible. In the main proceedings in this case, the batteries are independent of the power supply apparatus, since the latter is complete even without those batteries, and separate customs classification is thus required.
21 The Commission considers that, for the view to be taken that a combination or a set of elements constitutes an operating unit which should be classified under a single tariff heading pursuant to Note 3 to Section XVI of the Nomenclature relating to machines fitted together to form a whole, it is necessary that such a unit or combination should perform a single, specific function and that this function should be reflected in the Nomenclature. Tariff subheadings 85.01.B.II and 85.04.B.I of the Nomenclature ought, it argues, to be construed as covering, respectively, the rectifier/charger cabinet and the accumulator cabinet, since the Nomenclature does not contain any tariff heading covering the specific function of ensuring an uninterruptible power supply.
22 It should be borne in mind in this regard that where, as in the main proceedings in this case, it appears that a product falls to be classified under two headings without application of General Rule 3(a), General Rule 3(b), which is essentially reproduced in Note 3 to Section XVI of the Nomenclature, provides that the classification of products made up of different components depends on the material or component which gives them their essential character.
23 The applicability of that rule in the main proceedings in this case is corroborated by Rule 3(b), point VIII, of the General Rules for the Interpretation of the Nomenclature of the Customs Cooperation Council, which provides inter alia that it applies to goods with separable components, provided those components are adapted one to the other and are mutually complementary and that together they form a whole which it would be difficult to sell in different parts. It is common ground that the static unit here at issue in the main proceedings does not function and does not perform the role for which it was constructed when it is separated from the accumulator battery.
24 It is therefore necessary to examine, pursuant to General Rule 3(b), what is the essential character of the product in dispute. According to point VII of Rule 3(b) of the General Rules for the Interpretation of the Nomenclature of the Customs Cooperation Council, this character may be determined inter alia by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
25 Since the product in dispute is an `uninterruptible power supply' designed to regulate and ensure a permanent power supply, it must be held, first, that the rectifier/charger cabinet confers on it its essential character and, second, that the accumulator cabinet is of only secondary importance.
26 The accumulator battery in the accumulator cabinet constitutes, in summary, only an alternative source of accumulated energy designed to supply, within the limits of its autonomy, the inverter in the event of disruption or failure of the primary network of the rectifier/charger cabinet. Furthermore, the rectifier converts the alternating current into direct current which keeps the accumulator battery charged.
27 It follows that an electrical apparatus which is an `uninterruptible power supply', such as the product in dispute, must be classified under a single tariff heading, namely tariff heading 85.01.B.II, this being the position allocated to the rectifier/charger cabinet.
28 The answer to the questions, as rephrased, must therefore be that the Nomenclature must be interpreted as meaning that an electrical apparatus which is an `uninterruptible power supply' consisting, on the one hand, of a cabinet containing a rectifier/charger, an inverter and a static bypass switch and, on the other, of a cabinet housing a sealed lead-acid accumulator battery must be classified under tariff subheading 85.01.B.II as `transformers, static converters, rectifiers and rectifying apparatus'.
Decision on costs
Costs
29 The costs incurred by the Portuguese Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main action, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT
(First Chamber),
in answer to the questions referred to it by the Supremo Tribunal Administrativo by order of 28 February 1996, hereby rules:
Council Regulation (EEC) No 950/68 of 28 June 1968 on the Common Customs Tariff, as amended by Council Regulation (EEC) No 3331/85 of 5 December 1985, must be interpreted as meaning that an electrical apparatus which is an `uninterruptible power supply' consisting, on the one hand, of a cabinet containing a rectifier/charger, an inverter and a static bypass switch and, on the other, of a cabinet housing a sealed lead-acid accumulator battery must be classified under tariff subheading 85.01.B.II as `transformers, static converters, rectifiers and rectifying apparatus'.
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