delivered on 26 September 1985 (*1)

Mr President,

Members of the Court,

1. By order of 10 July 1984 the Bundesfinanzhof [Federal Finance Court] referred the following questions to the Court for a preliminary ruling:

‘(1) Is the Common Customs Tariff to be interpreted as meaning that an apparatus described as a timer/tuner, consisting of a colour-television reception component with a 12-programme memory and of a timer which can be preset to switch the apparatus on and off up to 10 days in advance, which must be combined with a video recorder of a specific design in order to convert into visible form transmissions received, is to be classified under Heading No 92.13 D of the Common Customs Tariff?

(2) If Question 1 is answered in the negative, which other heading of the Common Customs Tariff is the apparatus to be classified under?’

Permit me first of all to give a precise account of the characteristics of the apparatus in question and indicate the various classifications that have been proposed during the proceedings.

2. The apparatus, which is described as a timer/tuner T 50 (hereinafter referred to as ‘the T 50’) is manufactured in Japan; Telefunken Fernseh und Rundfunk GmbH (hereinafter referred to as ‘Telefunken’) sought to import the T 50 from Japan into the Federal Republic of Germany.

According to the technical explanations given, it appears that the T 50 is exclusively intended to supplement the VR 510 video recorder produced by the same manufacturer, to which it is linked by a special seven-core cable. The T 50 cannot be used with any other type of video recorder. It appears to have the following functions:

(i) It ensures the power supply to the video recorder.

(ii) It can programme a recording up to ten days in advance.

(iii) It receives television signals and passes them to the video recorder. This function is performed by the tuner, which contains a 12-programme memory making it possible to select one of 12 television channels for the purpose of recording a broadcast on the video recorder. After the colour signals have been received and passed to the video recorder they still need to be amplified and decoded; that is performed by the television receiver. The essential technical characteristic seems to be, however, that it is possible to record a television broadcast whilst another programme received through the same aerial is being shown on the television screen.

3. On importing the T 50, Telefunken applied to the Oberfinanzdirektion München [Principal Revenue Office, Munich] for a binding customs tariff ruling; a ruling was issued on 14 April 1982. The Oberfinanzdirektion classified the T 50 under subheading 85.15 A III b 2 of the Common Customs Tariff, which covers ‘receivers, whether or not incorporating sound recorders or reproducers’. Such a classification results in an autonomous duty of 22% or a conventional duty of 14%.

The classification was based on Rule 3 (b) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff. That rule provides as follows:

‘3. When for any reason goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

(a) ...

(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.’

Rule 3 (a) provides as follows:

‘The heading which provides the most specific description shall be preferred to headings providing a more general description.’

The Bundesfinanzhof states that the Oberfinanzdirektion considered the colour-television receiver to be the component which gave the T 50 its essential character within the meaning of Rule 3 (b).

Telefunken challenges that ruling on the ground that the T 50 cannot function on its own and cannot therefore be regarded as a television reception apparatus. In particular, it does not reproduce directly the signals received and cannot therefore be equated with a receiver. It maintains that the T 50 should be classified under tariff subheading 92.13 D, which reads as follows:

‘92.13 Other parts and accessories of apparatus falling within Heading No 92.11: ... D. Other’.

The T 50 should, in its view, be regarded as a part of a ‘television image and sound recorder or reproducer’, falling under tariff subheading 92. 11 B. Such a classification would lead to the imposition of an autonomous customs duty of 18% or conventional duty of 9%.

Telefunken emphasizes that the function of the T 50 is not to reproduce images but to transmit signals to the VR 510 video recorder for the purpose of recording. In its view, a technical distinction must be drawn between the markets in radio and television equipment. Radio tuners are independent units which may be linked to amplifiers and loudspeakers of any make; they may therefore be classified as independent goods. Television tuners, on the other hand, are necessarily incorporated in television sets and enable images to be received; they cannot therefore be marketed as independent goods.

According to Telefunken, video recorder design has reached a stage of development which lies between the stages reached by television and radio equipment. Whereas originally video recorders were manufactured with tuners incorporated (‘video compact’) as in the case of television sets, demand from customers led to the manufacture of two units, the timer/tuner on the one hand and the video recorder on the other. However, the T 50 can still only be used with the VR 510 video recorder. According to Telefunken, it follows that the T 50 must be regarded as an accessory of the video recorder and hence should be classified under tariff subheading 92.13 D.

Alternatively, Telefunken considers that it would also be possible to classify the T 50 under subheading 92.11 B of the Common Customs Tariff on the ground that it is a necessary part of the video recorder that is sold as a separate unit simply because of demand and should be regarded as an unassembled part of the video recorder. It bases that view on Rule 2 (a) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff, which provides as follows:

‘2. Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), imported unassembled or disassembled.’

Such a classification would give rise to an autonomous duty of 13% or a conventional duty of 8%.

4. In its observations, the Commission takes the view that the T 50 cannot be classified as a part or accessory within the meaning of subheading 92.13 D of the Common Customs Tariff. Since its essential function is to receive television broadcasts, it should be classified under tariff subheading 85.15 A III b 2, in accordance with the ruling of the Oberfinanzdirektion.

The Commission refers to Note 1 (c) to Chapter 92, which states as follows:

‘This Chapter does not cover: ...’

Microphones, amplifiers, loudspeakers, headphones, switches, stroboscopes and other accessory instruments, apparatus or equipment falling within Chapter 85 or 90, for use with but not incorporated in or housed in the same cabinet as instruments of the present Chapter; sound recorders or reproducers combined with a radio or television receiver (Heading No 85.15).

It adds that any interpretation of the Common Customs Tariff must be based on the principle that all goods or apparatus must be classified according to their nature or particular characteristics.

The Commission, referring to the Explanatory Notes to the Customs Cooperation Council Nomenclature, observes that the T 50 is imported as an independent apparatus and unquestionably has all the characteristics and performs all the functions of a television reception apparatus. It is immaterial that the television signals which it receives cannot immediately be converted into visible images. The Commission observes that, as was indicated by the Bundesfinanzhof in its order, radio receivers not incorporating loudspeakers are, according to well established tariff practice, still regarded as reception apparatus for the purposes of tariff Heading No 85.15, even if they cannot immediately make the signals received audible.

5. The timer/tuner must be classified either by reference to its essential characteristics or on the basis that it forms a ‘functional unit’ with the video recorder.

It appears from Note 1 (c) to Chapter 92 of the Common Customs Tariff that, where an apparatus is independent and not incorporated in or housed in the same cabinet as an instrument falling under Chapter 92, it must be classified under its own heading according to its particular nature.

However, unlike the apparatus referred to in Note 1 (c) (microphones, amplifiers and so forth), the timer/tuner is not listed in the Common Customs Tariff. It does not have its own heading.

Consequently, it is necessary to determine first of all whether it may be assimilated to any of the categories of apparatus listed in the Common Customs Tariff.

In order to decide whether the timer/tuner may be regarded as a ‘television reception apparatus’ (tariff Heading No 85.15), the Court must, in the exercise of its power of interpretation, define what is meant by that term. In my view, in order to qualify as such an apparatus must be capable not only of receiving a signal but also of converting it into visible images. Although a technical or legal definition does not necessarily correspond to the layman's understanding of a term, it is none the less desirable that the two should correspond. As Telefunken emphasized, it is quite clear that the ‘man in the street’ could not imagine a television receiver being anything other than an apparatus incorporating a cathode-ray tube that enables images to be seen. It is common ground that the timer/tuner neither incorporates such a tube nor is capable of amplifying or demodulating the colour signals which it receives and transmits to the video recorder. If I have correctly understood the explanations given at the hearing, it is the television receiver which performs those operations and produces an image when the video recorder subsequently transmits the recorded signals to it.

The Commission points out that the Nomenclature of goods for the external trade statistics of the Community and statistics of trade between Member States (Nimexe), which is based on the Common Customs Tariff, distinguishes between ‘television, with integral tube’, and ‘other apparatus for television’. However, that does not permit the conclusion that ‘other apparatus’ does not incorporate a means of reproducing images and sounds, such as a large screen upon which the image is projected (a case envisaged in a Commission classification slip of 7 March 1975, to which the Commission also refers). No example of a television receiver not incorporating a means of reproducing the image has been given so as to alter that view.

As regards the Commission's final argument, I consider that Telefunken correctly observes that a comparison between a radio reception apparatus and a television reception apparatus is scarcely relevant, since their methods of operation are different. In radio-broadcasting acoustic signals, after being received, merely require amplification before being emitted as sound through the loudspeakers. Colour-television signals, on the other hand, are incomplete inasmuch as their form is determined by the particular broadcasting system and they must first be demodulated and arranged in the form of a raster before an image is obtained. At present, whilst a radio tuner, even without loudspeakers, may in my view be considered a complete receiver, since it can process completely the signal received, it appears to me that the entire function of receiving audiovisual signals can, at the present stage of technical development, only be performed by an apparatus which not only receives the signals but also amplifies and demodulates them and produces the picture.

I consider therefore that the T 50, which merely receives signals, cannot be regarded as an apparatus whose essential function is television reception.

Nor can the T 50 in my view be regarded, for the purposes of Rule 2 (a) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff, as a component of the VR 510 video recorder with which it forms a ‘functional unit’. A T 50 cannot be used on its own. It is exclusively intended for use with the video recorder. The video recorder, on the other hand, can function independently: it can for example record a broadcast directly from the television receiver. It can thus be used independently and perform functions other than that which it performs when combined with the T 50, which is the recording of one programme whilst another is being shown on the screen.

I consider therefore that the T 50 cannot be classified under tariff subheading 92.11 B by applying Rule 2 (a) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff.

In view of the fact that, unlike the accessory instruments, apparatus and equipment referred to in Note 1 (c) to Chapter 92 of the Common Customs Tariff, the timer/tuner is not covered by any specific heading, it must in my view be classified under tariff subheading 92.13 D, in conjunction with subheading 92.11 B.

As I have already stated, whereas the timer/tuner can only be used with the VR 510 video recorder, the reverse is not true. Although it cannot be regarded as a necessary part of the video recorder, it may on the other hand be regarded as an accessory thereof.

I think it important at this point to refer to certain information given by Telefunken at the hearing: there also exist compact video recorders incorporating a video tuner. In the case of such video recorders — and the Commission has not disputed this — the entire apparatus is classified under Chapter 92 as a video recorder. Accordingly, in the absence of a specific tariff heading and by analogy with the classification of the compact video recorder, I consider that the timer/tuner, which is exclusively intended for use with the VR 510 video recorder and is incapable of functioning on its own, should be regarded as an accessory of a video recorder, that is to say, of an ‘apparatus falling within Heading No 92.11’ within the meaning of tariff subheading 92.13 D.

Since I propose that Question 1 be answered in the affirmative, it is in my view unnecessary to answer Question 2; moreover, Question 2 requests of the Court nothing less than a tariff classification of the apparatus concerned, which is a matter for the national court.

Consequently, I propose that the Court should reply as follows to the question submitted by the Bundesfinanzhof:

An apparatus described as a timer/tuner which consists of a colour-television reception component with a 12-programme memory and of a timer that can be preset to switch the apparatus on and off up to 10 days in advance and which must be combined with a video recorder of a specific design in order to reproduce the broadcasts received may be regarded as a part or accessory within the meaning of Heading No 92.13 of the Common Customs Tariff.

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(1) Translated from the French.