Important legal notice

61999C0042

European Court reports 2000 Page I-07691

Opinion of the Advocate-General

The legislative framework

0406 90 - Other cheese:

0406 90 11 - - For processing.

(a) a milkfat content, by weight of the dry matter, of 5% or more;

(b) a dry matter content, by weight, of at least 70% but not exceeding 85%; and

(c) they are moulded or capable of being moulded.

5. Chapter 35 of the Combined Nomenclature is entitled Albuminoidal substances; Modified starches; Glues; Enzymes. The description against heading 3501 is Casein, caseinates and other casein derivatives; casein glues. That heading includes:

3501 10 - Casein:

3501 10 90 - - Other.

6. Regulation No 2658/87 provides for the Commission to be assisted by a Committee on Tariff and Statistical Nomenclature; the Commission, acting pursuant to a prescribed procedure involving the Committee, may adopt Explanatory Notes. The Explanatory Notes to the Combined Nomenclature of the European Communities in the version applicable at the material time state as follows:

3501 Casein, caseinates and other casein derivatives; casein glues

3501 10 10

to Casein

3501 10 90

These subheadings cover the caseins referred to in the HS Explanatory Notes to Heading No 3501, (A), (1). These caseins - irrespective of the method of precipitation used to obtain them - are classified in these subheadings when they contain 15% or less by weight of water; otherwise they are classified in Heading No 0406.

Casein is the main protein constituent of milk. It is obtained from skimmed milk by precipitation (curdling), generally with acids or rennet. The heading covers various types of casein which differ according to the method of curdling, e.g., acid casein, caseinogen and rennet casein (paracasein).

Casein is usually a yellowish-white granular powder, soluble in alkalis but not in water. It is used mainly in the preparation of glues, paints or distempers, for the coating of papers, and in the manufacture of casein plastics (hardened casein), man-made fibres, dietary or pharmaceutical products.

Facts

10. The Supremo Tribunal Administrativo considered that there was a conflict between the notes to Chapter 4, which in its view specify a dry matter content ... of at least 70% but not exceeding 85% for classification under heading 0406, and the Explanatory Notes to the Combined Nomenclature, which state that caseins containing by weight more than 15% water are included under heading 0406. Moreover the fat content (1%) of the product at issue is less than the minimum (5%) required for heading 0406 and the dry content (by inference, not exceeding 46%) does not attain the minimum 70% required for heading 0406. It accordingly stayed the proceedings and referred the following questions for a preliminary ruling:

(a) they have a fat content of 5% or more;

(b) they have a dry matter content, by weight, of at least 70% but not exceeding 85%; and

(c) they are moulded or capable of being moulded?

Observations of the parties

11. Written and oral observations have been submitted by ERU Portuguesa, the Commission and the Portuguese Government.

12. The written observations of ERU Portuguesa and the Commission focus primarily on the apparent inconsistency between the Explanatory Notes relating to subheadings 3501 10 10 to 3501 10 90 and the chapter notes relating to heading 0406. Since the product has a moisture content of 54%, it cannot be classified under subheading 3501 10 90 without conflicting with those Explanatory Notes. Since it has a fat content of 0.9%, however, neither can it be classified under heading 0406 without conflicting with the chapter notes.

13. ERU Portuguesa concludes that the Explanatory Notes cannot be the basis for classification of the product under heading 0406: the chapter notes contain no relevant exception and the Explanatory Notes had not been properly circulated in 1989, since they were not published in any official journal or bulletin. In the alternative, ERU Portuguesa submits that, since the product cannot be classified under heading 0406 since it does not satisfy the three conditions set out in the chapter notes, it should be classified under heading 0410, Edible products of animal origin, not elsewhere specified or included.

14. The Commission for its part concludes that the Explanatory Notes to heading 3501 must be regarded as in effect overridden by the chapter notes to heading 0406, since the latter but not the former are legally binding; the product should accordingly be classified under subheading 3501 10 90.

15. Portugal, however, makes the point that the three conditions set out in the chapter notes to heading 0406 are there expressed to apply only to products obtained by the concentration of whey and with the addition of milk or milkfat. Portugal asserts that the product in question was not so obtained; it does not therefore have to satisfy the three conditions set out in the chapter notes in order to be classified under heading 0406. Since the product contains more than 15% by weight of water, by virtue of the Explanatory Notes to Chapter 35 it should accordingly be classified under heading 0406.

16. Portugal attaches to its observations the letter of 27 April 1989 in which ERU Portuguesa contested the original classification of the product. It is stated in that letter that the product was made from skimmed milk to which rennet was added. Since the raw material from which the product was made appears to be crucial in determining its correct classification, the Court put a written question to ERU Portuguesa and Portugal, requesting them to confirm whether that was correct. Both parties confirmed that the product was indeed made from skimmed milk.

18. The Commission accepted that the notes to Chapter 4 could be disregarded. It put forward an entirely new argument to the effect that, since the phosphorus content of the product was, at 5.7%, too high for cheese, the product should not in any event be classified under heading 0406. Nor was it a casein, since with a water content of 54% it exceeded the maximum moisture content for casein of 10% set by Directive 83/417. In the Commission's view, the product should be classified under subheading 2106 90 99, Food preparations not elsewhere specified or included - Other - Other. The residual heading suggested in the alternative by ERU Portuguesa in its written observations is, according to the Commission, inappropriate, as it is intended to encompass turtle eggs and other such products.

19. ERU Portuguesa also accepted at the hearing that the notes to Chapter 4 were irrelevant since the product was not obtained by the concentration of whey and appeared to accept the Commission's new argument that the phosphorus content of the product was too high for it to be classified as cheese. It added that no laboratory analysis had been produced to corroborate the composition of the product and concluded that, since in its view the known composition of the product was not sufficient to identify the nature of the product, it was not possible to establish its correct classification in the Combined Nomenclature, in which case the importer's classification under heading 3501 should be retained.

Analysis

21. The Combined Nomenclature and the Harmonised System are prefaced by six general rules for their interpretation, the first of which provides that ... for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions, none of which appears relevant to the resolution of this case.

22. The Court has, furthermore, consistently held that, in the interests of legal certainty and ease of verification, the decisive criterion for the customs classification of goods is in general to be sought in their objective characteristics and properties, as defined in the relevant Combined Nomenclature headings and section or chapter notes. Likewise, for the purpose of interpreting the Combined Nomenclature, both the chapter notes and the Explanatory Notes are important means for ensuring the uniform application of the tariff and as such may be regarded as useful aids to its interpretation. Those Explanatory Notes include both the notes drawn up, as regards the Combined Nomenclature, by the European Commission and, as regards the Harmonised System, by the Customs Co-operation Council. Although an important aid to the interpretation of the scope of the various tariff headings, the Explanatory Notes do not have legally binding force, so that it is necessary, where appropriate, to examine whether their content is in accordance with the actual provisions of the Common Customs Tariff and whether they alter the meaning of those provisions. The Court has also held that the Explanatory Notes drawn up by the Customs Co-operation Council are, in the absence of specific provisions of Community law, an authentic source for interpreting the headings to the Common Customs Tariff. That principle is reflected in the Foreword to the Explanatory Notes at issue in this case, which states:

The Explanatory Notes to the Combined Nomenclature of the European Communities contain many references to [the Harmonised System] Explanatory Notes and thus do not take the place of those Explanatory Notes but should be looked upon rather as being complementary to them. The two publications must therefore often be used in conjunction with one another.

23. In this case, the terms of the headings do not provide any relevant information and there are no relevant section or chapter notes. There is however an Explanatory Note to Chapter 35 which expressly states that caseins containing more than 15% of water are to be classified under heading 0406. The issue therefore is whether there is any reason not to apply that note.

24. It is clear from the case-law of the Court that the note may not apply if the content of that note is not in accordance with the actual provisions of the Combined Nomenclature or if it alters the meaning of those provisions. It is accordingly necessary to consider the scope of, on the one hand, casein in heading 3501 and, on the other hand, cheese in heading 0406.

25. The fact that those terms are not defined by the Combined Nomenclature leads to the supposition that the products are regarded as sufficiently characterised by their very descriptions and in particular their objective characteristics and properties.

26. The principal definition of cheese in the New Shorter Oxford English Dictionary is the curds of milk (coagulated by rennet) separated from the whey and pressed into a solid mass. It has been made by the coagulation of milk since ancient times: Homer's Odyssey recounts how the Cyclops Polyphemus sat down to milk his ewes and bleating goats, which he did methodically, putting her young to each mother as he finished. He then curdled half the white milk, gathered it all up, and stored it in wicker baskets ... in his cave where Ulysses and his men found it. We do not know what coagulating agent Polyphemus used; the use of rennet in Roman times is however recorded by Columella in Rei Rusticae (On Rustic Matters, c. AD 65), who wrote that milk

should be curdled with rennet obtained from a lamb or kid, although it can also be done with the flower of the wild thistle or the seeds of the safflower, and equally well with the liquid which flows from a fig-tree if you make an incision in the bark while it is still green.

27. Casein is defined in the New Shorter Oxford English Dictionary as the chief protein of milk; exp. this in coagulated form, as in cheese.

28. Thus it is immediately clear that the product at issue in this case cannot be classified as casein solely by virtue of the fact that it was produced by the coagulation of skimmed milk with rennet. If rennet is added to milk, the casein fraction of the proteins coagulates and shrinks, trapping the fat globules and forcing out the whey. ... Once the curd has formed it is worked in one way or another to produce the characteristic texture of the particular type of cheese. If, as ERU Portuguesa argues, the product should be classified as casein solely because it is the result of such a process, there would appear to be little scope for heading 0406; certainly the vast majority of the cheeses individually listed under that heading are produced in this way.

29. There must therefore be further objective characteristics and properties of casein beyond the mere fact that it is the result of coagulating milk.

30. The Harmonised System Explanatory Notes set out above confirm the method of production of casein and state that it is usually in the form of a granular powder not soluble in water. ERU Portuguesa indicated in its initial letter to the Portuguese customs authorities that the product at issue takes the form of flakes, apparently because it has been compressed rather than dehydrated; it also states that the product is not soluble in water. As Portugal pointed out at the hearing, however, it is common ground that this product is 54% water. In any event, the mere fact - if it be the case - that the product is not soluble in water cannot in my view mean that it cannot be cheese, since most cheese is also not soluble in water.

32. There is also, as mentioned by the Commission at the hearing, a directive issued by the Council under Article 100 of the EC Treaty (now Article 94 EC) on the approximation of the laws relating to caseins and caseinates. That directive seeks to determine, at Community level, the rules which must be observed as regards the composition and labelling of these products. Article 1(2) defines caseins as the principal protein constituent of milk, washed and dried, insoluble in water and obtained from skimmed milk by precipitation by a number of methods including the use of rennet. Section III of Annex I prescribes the standards applicable to edible rennet casein. Those standards include under the heading (A) Essential factors of composition a maximum moisture content of 10%.

33. A final source of information as to the objective characteristics and properties of casein is the Codex Alimentarius drawn up by the Food and Agriculture Organisation and the World Health Organisation. The Court has used the Codex in determining the characteristic features of yoghurt in a case on the labelling of foodstuffs and in deciding whether a food additive presents a risk to public health or meets a real need, especially a technological one. The standard for edible casein products in the current version of the Codex (Codex stan A-18-1995) defines edible rennet casein as the product obtained after washing and drying the coagulum remaining after separating the whey from skimmed milk which has been coagulated by rennet or by other coagulating enzymes and in the composition table sets a maximum moisture of 12%.

34. All the above sources except the Harmonised System Explanatory Notes coincide in requiring that casein be dried with a maximum moisture content of 12% or less. That consensus leads me to conclude that the requirement in the Commission's Explanatory Note to the Combined Nomenclature subheadings 3501 10 10 to 3501 10 90 that caseins are to be classified in those subheadings only when they contain 15% or less by weight of water is in accordance with and does not alter the meaning of casein in the Combined Nomenclature. Moreover, it is not actually inconsistent with the Harmonised System Explanatory Notes. There is in my view accordingly no reason in the present case to disregard that note, with the result that the product at issue, made by the addition of rennet to skimmed milk, described as skimmed milk cheese on the exporter's invoice and intended for further processing into dietetic cheese, is to be classified under subheading 0406 90 11 as (unspecified) cheese for processing.

Conclusion

41. I accordingly conclude that the questions referred by the Supremo Tribunal Administrativo, Portugal, should be answered as follows:

A product produced by the addition of rennet to skimmed milk, composed as to 54% water, 0.9% fat, 5.7% phosphorus, 2% salt, and as to the remainder casein, and intended for use in the manufacture of dietetic products, is to be classified under subheading 0406 90 11 of the Combined Nomenclature as Other cheese: - For processing.