delivered on 15 May 1985 (*1)

Mr President,

Members of the Court,

1.In October and December 1978 Firma J. Henr. Drünert (hereinafter referred to as ‘Driinert’) imported into the Federal Republic of Germany 449 bundles of balsa wood originating in Ecuador.

After inspecting the wood, the customs authorities in Bremen classified 381 bundles under heading No 44.13 of the Common Customs Tariff, which applies to :

‘Wood (including blocks, strips and friezes for parquet or wood block flooring, not assembled), planed, tongued, grooved, rebated, chamfered, V-jointed, centre V-jointed, beaded, centre-beaded or the like, but not further manufactured’,

on the ground that the opposite faces had been smoothed to such an extent that no sign of the original saw marks was any longer visible.

Customs duty of 5% of the value of the goods was therefore levied.

In the customs declaration, however, Drünert had described the imported wood as follows:

‘Balsa sawn timber, wood sawn lengthwise, but not further prepared, hardwood with a thickness of 52 mm or more’.

It had requested that the goods be classified under heading No 44.05 of the Common Customs Tariff, which covers :

‘Wood sawn lengthwise, sliced or peeled, but not further prepared, of a thickness exceeding 5 mm’.

If the goods were classified under heading No 44.05, no duty would be payable.

Drünert challenged the decision of the customs authorities before the Finanzgericht [Finance Court] Bremen, which found in its favour.

On an appeal on a point of law brought by the customs authorities, the Bundesfinanzhof [Federal Finance Court] stated that heading No 44.05 had not yet been the subject of interpretation by the Court of Justice, and the correct application of that heading was not so clear as to exclude all reasonable doubt. Taking the view that the Customs Cooperation Council's Explanatory Note to tariff heading No 44.05 was incompatible with the terms of that heading, the Bundesfinanzhof submitted the following question to the Court for a preliminary ruling:

‘Is heading No 44.05 of the Common Customs Tariff to be construed as covering balsa wood sawn lengthwise, of a thickness exceeding 5 mm, which has been smoothed on two opposite narrow sides so that no sign of the original saw marks is now visible? If this question is answered in the negative, should such goods be classified under heading No 44.13 of the Common Customs Tariff?’

2.First of all, a correction must be made: from the unchallenged observations of the Commission of the European Communities and from statements made at the hearing it is clear that, contrary to what was stated in the judgment of the Finanzgericht Bremen and in the order of the Bundesfinanzhof, the balsa wood, which has the form of a parallelepiped more than 5 mm thick, had been smoothed not on the narrow sides but on the two opposite faces which, in the case of the 381 bundles in question, showed no sign of the original saw marks.

It is clear from the summary of the facts provided by the Bundesfinanzhof that in order to achieve that result the balsa wood was first cut with coarse circular saws. It was then dried in special ovens and squared, on the ground — apparently not challenged before the national court — that that was necessary in order to enable the quality of the wood to be checked. Finally, it was cut lengthwise and ‘trimmed’ on both sides with a relatively fine circular saw. The wood was then graded and divided into bundles in order to meet the orders which had been placed.

Those details are necessary in order to give a better understanding of the case. However, it must be remembered that the Court, in ruling under Article 177, ‘does not have jurisdiction to apply the Community rules to a specific case’, but ‘may, however, supply the national court with the principles of interpretation relating to Community law which may be useful in the application of this rule’ (judgment of 23 October 1975 in Case 35/75 Matisa v Hauptzollamt Berlin [1975] ECR 1205).

3.According to Drünert, it is not disputed that the balsa wood was bought and resold as ordinary sawn balsa wood. It states that of all the bundles subsequently inspected by the customs authorities 11.7%, though treated in the same way as the others, were smooth in appearance.

Drünert contends that according to the Explanatory Note to heading No 44.05 an operation additional to sawing does not prevent wood from being classified under that heading.

The third paragraph of the Explanatory Note to that heading provides that rough planing which merely removes excrescences and some of the saw marks does not affect the classification of sawn wood in that heading.

In addition, two classification slips of 18 May 1972 on the same tariff heading also permit the classification under heading No 44.05 of wood that is:

— shaped to a parallelepiped by passing the tree trunk through a profile cutter which is ‘in general a little smoother than that obtained by sawing, but still bears traces of the tools used’ (Reference No 076); or

— ‘smoothed on one side or on two adjoining sides by means of a sizer in order to correct small errors of dimension due to the high speed of the sawing. The uniform dimensions obtained simplify the tasks of packing and transporting, and also subsequent working up’ (Reference No 075).

Drünert refers in particular to Classification Slip No 075, claiming that the only difference in this case is that a sizer can smooth two adjoining sides whereas the smoothing machine smooths the two opposite surfaces of the wood because it works with opposite shafts. It adds that although the sizer corrects differences of dimension, the only purpose of the smoothing machine is to allow the product to be examined and graded. The effect is the same, as in neither case is there any ‘intensive preparation, resulting in a finished or at least a semi-finished product’, which is, in its view, a precondition for classification under tariff heading No 44.13 and in the absence of which the wood must be classified under heading No 44.05.

The Commission recognizes that the balsa wood to be classified here is a borderline case. In its view, however, since there is no longer any sign of the original saw marks, the wood must be classified under heading No 44.13. The Commission does not accept that it is necessary to put the balsa wood on a smoothing machine in order to check its quality, since in its view it may be checked without smoothing of the surfaces. It points out that according to the Explanatory Note to heading No 44.05, ‘hit or miss’ dressing, that is rough planing which does not prevent the classification of sawn wood under that heading, merely removes excrescences and some of the saw marks. It also stresses that according to the Explanatory Note to heading No 44.13 wood must be classified under that heading even if only one face or side has been planed.

According to the Commission, Classification Slip No 075 of 18 May 1972 is of little relevance in this case, as it concerns smoothing on two adjoining sides owing to the need to correct errors of dimension, whereas balsa wood, being a soft wood, can immediately be sawn into satisfactory dimensions. Furthermore, the dimensions are not important as regards the ultimate use of the balsa wood. The same does not apply to the smoothing of the surfaces : used usually to make models, the wood is cut into batons or slats, which must be uniform in size. The fact that the surfaces are smooth is therefore decisive, since after smoothing the balsa becomes more valuable.

As regards the second part of the question, Drünert considers that wood falls within tariff heading No 44.05 if it cannot be classified under heading No 44.13, that heading being applicable only to wood which following intensive preparation has resulted in a finished or at least a semifinished product.

The Commission considers that if the wood cannot be classified under heading No 44.05 it must, in the absence of any more specific provision, be classified under heading No 44.13, although that cannot be stated categorically since other headings may be applicable in particular cases.

4.The Court has consistently stated that ‘in the interests of legal certainty and of administration’, ‘the decisive criterion for the customs classification of goods must generally be looked for in the objective characteristics and properties of products’ (judgments of 23 March 1972 in Case 36/71, Henck v Hauptzollamt Emden, [1972] ECR 187, at paragraph 4, and of 22 November 1973 in Case 128/73, Past v Hauptzollamt Freiburg [1973] ECR 1277, at paragraph 3).

Headings Nos 44.05 and 44.13 of the Common Customs Tariff are part of a nomenclature (Chapter 44) in which the wood is graded according to the degree of preparation which it has undergone. Thus Chapter 44 covers fuel wood and its products, followed by wood in the rough or wood merely stripped of its bark or roughed down, wood roughly squared or half-squared (No 44.04), wood sawn lengthwise of a thickness exceeding 5 mm (44.05) and finally wood prepared for special purposes (Nos 44.06 to 44.19). The Chapter ends by setting out a number of articles made of wood.

As the Commission's representative has stressed, the ‘philosophy’ of the Common Customs Tariff is to take into account the work carried out on the wood in order to protect employment in the Community by requiring that in principle duty should be paid in respect of any product on which work has been carried out in the exporting country which could have been carried out by workers in the importing Member State.

Viewed in that light, tariff headings Nos 44.05 and 44.13 form part of a logical system, as is further confirmed at the beginning of the Explanatory Note to heading No 44.13, which provides as follows:

‘This heading covers timber, particularly in the form of boards, planks, etc., which, after sawing or squaring, has been surface worked by planing to produce smooth, flat surfaces, and generally worked along the edges to facilitate subsequent assembly’ (emphasis added),

and goes on to state that:

‘Planed wood includes wood planed on one or more surfaces’.

At first sight, both the wording of the two tariff headings in question and the terms of the Explanatory Notes give the impression that the objective characteristic of the wood to be used in order to choose between the two possible headings is its appearance: that is to say whether it is smooth (when heading No 44.13 will be applicable) or not (in which case heading No 44.05 applies).

That approach is confirmed by the third paragraph of the Explanatory Note to heading No 44.05, which refers to rough planing which merely ‘removes excrescences and some of the saw marks’, and Classification Slip No 076, referred to above, which also mentions ‘traces of the tools used’. Although the other Classification Slip does not refer to the existence of such traces, its statement of reasons shows that that case concerned the ‘elimination of errors of dimension’. That is not an issue in this case.

The appearance of the wood is therefore undoubtedly an objective characteristic which may be used as a criterion of classification for the delimitation of the two tariff headings at issue. However, the Court has always ruled that that criterion must ‘generally’ or ‘in principle’ be looked for in the objective characteristics of products (Case 128/73, cited above, paragraph 3, and Case 36/71, cited above, paragraph 4). The Court has thus acknowledged that such a criterion may prove inadequate. This ‘borderline case’, as it has been described by the Commission, appears to be a perfect example of the need which may occasionally arise to resort to a supplementary criterion. The customs authorities do not allege that any of the bundles of balsa wood imported were treated in a different way from the rest. In some bundles, the two faces were smooth in appearance, so that they were classified under heading No 44.13, whereas in others all the faces were said still to bear traces of the tools used. It would not be logical to classify under different headings identical wood which has been subject to identical treatment, on the basis solely of its appearance, and it is not consistent with the requirement of legal certainty.

In similar cases, the Court has always endeavoured to reconcile the need for legal certainty with the need to supply the national court with the guidance which it needs to decide an individual case. As regards aids to interpretation, the Court has stated as follows:

‘In the absence of relevant Community provisions, the Explanatory Notes and the classification opinions provided for by the Convention on Nomenclature for the Classification of Goods in Customs Tariffs are an authoritative source for the purpose of the interpretation of the headings to the Common Customs Tariff’ (Case 35/75, cited above, at p. 1210, paragraph 2).

In that regard, the Explanatory Notes to the headings in question show that, as well as being merely sawn, as referred to in heading No 44.05, and subject to the complicated operations set out in No 44.13, wood maybe subject to additional treatment — such as rough planing — which does not prevent its being classified under heading No 44.05.

Such intermediate situations sometimes necessitate recourse to some additional criterion, as referred to above. In such cases, the Court has looked beyond the strict definitions in order to ascertain the purpose of the operation supplementing the basic treatment and so discover whether or not it should affect the tariff classification of the product in question.

Thus in Case 128/73 it was necessary to find a criterion enabling a distinction to be drawn between sheep and lamb skin leather which was ‘not further prepared than tanned’ and leather which had had additional treatment so as to render it ready for use, when it was to be classified under ‘other’. The Court stated that it was necessary to look for the function of the additional treatment, which in that case consisted of the addition of fat to the tanning liquids. Considering the possibility that the addition of fat was indispensable in order to proceed to the second phase of treatment in the importing country the Court ruled as follows:

‘The competent national authorities must judge whether the addition in question constitutes an essential process in tanning by reason of its function of preserving the leather without rendering it ready for use’ (paragraph 6) (emphasis added).

It is clear from the wording of heading No 45.05 and from the Explanatory Notes and Classification Slips thereto that wood which is merely sawn must undergo further work and that sawing does not amount to preparation (for purposes of transportation or packing or in order to facilitate work to be carried out at a later stage). On the other hand, heading No 44.13 covers operations the simplest of which is planing and whose function is to give the piece of wood, or at least the surfaces treated, a definitive form. That form is needed for the use to which the wood is ultimately to be put, which according to the Explanatory Note will generally be some kind of assembly. Heading 44.13 thus involves the idea that the wood will immediately be used in the form attained after the operations listed.

It may therefore be inferred that if an operation carried out on wood has brought about a result similar to that of planing, without its being possible directly to use the wood in the form of planks with two smooth opposite surfaces, it should not necessarily be classified under heading No 44.13. In other words, if the competent national court considers that the smoothed wood, which may even be partly polished, requires further work before it may be used for its intended purpose, the smoothing does not in itself prevent the wood from being classified under heading No 44.05. However, if there is any doubt on that question, the national court may then confine itself to applying the primary objective criterion of the appearance of the wood without referring to an additional criterion.

5.The second half of the question referred to the Court asks whether if the wood cannot be classified under heading No 44.05 it must inevitably fall within heading No 44.13. That question cannot be given a definite answer. As I have stressed, it is true that there is an obvious link between the two headings. However, once again it is a matter for the competent national authority to determine the nature of that link and to state in such cases which other heading of the Common Customs Tariff covers the circumstances of an individual case.

6.Consequently, I propose that the Court should answer the question referred to it by the Bundesfinanzhof as follows:

—Wood of a thickness exceeding 5 mm which has been smoothed on two opposite faces so that no sign of the original saw marks is now visible may be classified under heading No 44.05 of the Common Customs Tariff provided that any operation other than mere sawing lengthwise by which such smooth surfaces were produced does not preclude further treatment at a later stage enabling the wood to be used in accordance with its intended purpose.

—If the wood cannot be classified under tariff heading No 44.05, it is for the competent national authority to determine on the basis of the appearance of the wood in question whether it falls within heading No 44.13 or some other tariff heading.

*1 Translated from the French.