(References for a preliminary ruling from the Finanzgericht Düsseldorf)

(Common Customs Tariff – Tariff classification – Combined Nomenclature – Camcorders)

Judgment of the Court (Third Chamber), 27 September 2007

Summary of the Judgment

Common Customs Tariff – Tariff headings – Camcorders with DV-in function capable of being activated after customs clearance

1.A camcorder may be classified under subheading 8525 40 99 of the Combined Nomenclature in Annex I to Regulation No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff, only if the function for recording images and sounds from sources other than the integrated camera or microphone (the ‘DV-in’ function), which constitutes the essential characteristic of a camcorder classified under that subheading, is active at the time of customs clearance or if, even though the manufacturer did not intend to emphasise that characteristic, that function may be activated subsequently by simple modification of the apparatus by a user who does not have special skills, without modification of the camcorder’s hardware. Where the camcorder is activated subsequently, it is also necessary, first, that, once activated, it functions in a manner similar to that of another camcorder whose DV-in function is active at the time of customs clearance and, second, that it functions independently. The existence of those conditions must be capable of being ascertained at the time of customs clearance. It is for the national court to establish whether those conditions are fulfilled. If those conditions are not fulfilled the camcorder must be classified under subheading 8525 40 91 of the Combined Nomenclature.

(see paras 35, 44, operative part)

27 September 2007 (*)

(Common Customs Tariff – Tariff classification – Combined Nomenclature – Camcorders)

In Joined Cases C‑208/06 and C‑209/06,

REFERENCE for two preliminary rulings under Article 234 EC from the Finanzgericht Düsseldorf (Germany), made by decisions of 4 May 2006, received at the Court on 8 May 2006, in the proceedings

Hauptzollamt Duisburg,

Hauptzollamt Krefeld,

THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, J.N. Cunha Rodrigues, U. Lõhmus, A. Ó Caoimh and P. Lindh (Rapporteur), Judges,

Advocate General: Y. Bot,

Registrar: J. Swedenborg, Administrator,

having regard to the written procedure and further to the hearing on 21 March 2007,

after considering the observations submitted on behalf of:

– Medion AG and Canon Deutschland GmbH, by H. Nehm, Rechtsanwalt,

– the French Government, by G. de Bergues and A.-L. During, acting as Agents,

– the Commission of the European Communities, by J. Hottiaux, acting as Agent, and B. Wägenbaur, Rechtsanwalt,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

1.These references for preliminary rulings concern the interpretation of subheadings 8525 40 91 and 8525 40 99 of the Combined Nomenclature in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1), as amended by Commission Regulation (EC) No 2263/2000 of 13 October 2000 (OJ 2000 L 264, p. 1), Commission Regulation (EC) No 2031/2001 of 6 August 2001 (OJ 2001 279, p. 1), and Commission Regulation (EC) No 1789/2003 of 11 September 2003 (OJ 2003 L 281, p. 1), (‘the CN’).

2.The references were made in the course of two disputes between, first, Medion AG (‘Medion’) and the Hauptzollamt Duisburg and, second, Canon Deutschland GmbH (‘Canon’) and the Hauptzollamt Krefeld, concerning the classification in the CN of camcorders imported into Germany by those two companies.

Legal background

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

3. A description of any likely significant effects, to the extent of the information available on such effects, of the project on the environment resulting from:

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

4. The criteria of Annex III shall be taken into account, where relevant, when compiling the information in accordance with points 1 to 3.’

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]’

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

21 In those circumstances, the Finanzgericht Düsseldorf decided to stay its proceedings and refer the following question to the Court for a preliminary ruling:

‘Should a camcorder, which at the time of importation is unable to record video signals from an external source, be classified under subheading 8525 40 99 of the Combined Nomenclature if its video port can subsequently be reconfigured as a video input by means of activating certain switches even though the manufacturer and the seller have neither mentioned nor support this possibility?’

Case C-209/06

22 Between July 2001 and February 2002, Canon released for free circulation camcorder models MV 400, MV 425 and MV 3 MC. It declared those camcorders under subheading 8525 40 91 of the CN. During an investigation, the customs office in Krefeld (Germany) concluded that those camcorders were to be classified under subheading 8525 40 99 of the CN. An action was brought before the Finanzgericht Düsseldorf.

23 In support of its action, Canon emphasised the difference between the imported camcorders when equipped with and when not equipped with the DV‑in function, and submitted that, as regards the camcorders at issue, that function can be activated only by modifying the hardware. Canon also submitted that if the classification in subheading 8525 40 99 were to be retained when the DV-in function is activated after clearance, that would be contrary to the key fundamental principle of customs tariff classification. Basing classification on activation after customs clearance would lead to uncertainty as to whether that activation had in fact taken place and, therefore, as to the classification of the goods.

24 The national court commissioned an expert report identical to that undertaken in the dispute concerning Medion.

25 Following presentation of the expert report, the Finanzgericht Düsseldorf decided to stay its proceedings and to refer the following question to the Court for a preliminary ruling:

‘Should a camcorder, which at the time of importation is unable to record video signals from an external source, be classified under subheading 8525 40 99 of the Combined Nomenclature, if its video port can subsequently be reconfigured as a video input by using certain software, even though the manufacturer and the seller have neither mentioned nor support this possibility?’

26 By order of the President of the Court of 26 June 2006, Cases C‑208/06 and C‑209/06 were joined for the purposes of the written and oral proceedings and the judgment.

The questions referred for a preliminary ruling

Observations submitted to the Court

27 Medion and Canon submit that the questions referred for a preliminary ruling should be answered in the negative. They put forward a number of reasons for which the camcorders at issue in the main proceedings should be classified under subheading 8525 40 91 and not subheading 8525 40 99.

28 First, they point out that, at the time of customs clearance, none of those camcorders had the capability to record external video signals. Canon takes the view that only the functionality of the software which was operational at the time of customs clearance can be regarded as an objective characteristic of the product.

29 Medion and Canon further submit that any modification, including modification of codes and parameters of the software controlling the DV function, which is made without the agreement of the manufacturer, constitutes, in their view, an infringement of their intellectual property rights.

30 Finally, Medion and Canon stated that the expert appointed by the national court had to go to great lengths in order to activate the DV‑in function. At the hearing they added that, after activation of that function, the camcorders at issue can function as a video recorder only when they are connected to a personal computer, and cannot perform that function independently.

31 The French Government takes the view that the camcorders at issue must be classified under subheading 8525 40 99. The objective characteristics and properties of a product cannot be confined solely to the functions of that product which are ready to function at a particular moment, but cover all its potential functions. Therefore, even when disabled, a function such as the DV‑in function must be regarded as an objective characteristic and property of such camcorders, so long as it is possible to activate it without modifying the hardware.

32 The Commission also considers that those camcorders are covered by the category ‘Others’ in subheading 8525 40 99. It submits that the classification in the CN depends on the functions that camcorders are capable of performing at the time of import, that is to say, on the potential functions that they possess objectively at that time.

Findings of the Court

33 It is clear from the wording of the questions, which it is appropriate to deal with together, that the national court asks, essentially, whether, for the classification of the camcorders, the possibility to activate the DV‑in function may or must be taken into account if it has not been activated at the time of customs clearance, but if it may subsequently be activated manually or by the addition of software. It also asks whether there is any significance in the fact that the manufacturer neither pointed out nor supported the characteristics at the time of customs clearance.

34 First of all, that it is settled case-law that, in the interests of legal certainty and for 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 wording of the relevant heading of the CN and the notes to the sections or chapters (see, in particular, Case C‑42/99 Eru Portuguesa [2000] ECR I‑7691, paragraph 13; Case C‑500/04 Proxxon [2006] ECR I‑1545, paragraph 21; and Case C‑183/06 RUMA [2007] ECR I-0000, paragraph 27).

35 In that regard, it is irrelevant whether the manufacturer of the product intended or not to emphasise a particular characteristic of that product.

36 Furthermore, the Court has held that the decisive criterion for the customs classification of goods under the common customs tariff must be sought in the objective characteristics and properties of the products at the time of their presentation for customs clearance (Case 175/82 Dinter [1983] ECR 969, paragraph 10, and Case C‑33/92 Gausepohl‑Fleisch [1993] ECR I‑3047, paragraph 9). The objective characteristics and properties of products must be capable of being assessed at the time of customs clearance (see, to that effect, Case C‑233/88 van de Kolk [1990] ECR I‑265, paragraph 12; Case C‑38/95 Foods Import [1996] ECR I‑6543, paragraph 17; and Case C‑14/05 Anagram International [2006] ECR I‑6763, paragraph 26).

37 Furthermore, the intended use of a product may constitute an objective criterion for classification if it is inherent to the product, and that inherent character must be capable of being assessed on the basis of the product’s objective characteristics and properties (see Case C-459/93 Thyssen Haniel Logistic [1995] ECR I‑1381, paragraph 13, and Case C‑400/05 B.A.S. Trucks [2007] ECR I-313, paragraph 29).

38 Finally, the Court has held that it is clear from Article 2(a) of the General Rules for the interpretation of the CN that, for the purposes of customs classification, an incomplete or unfinished article is to be treated in the same way as a complete or finished article, provided that it has the essential character of the complete or finished article (see Case C‑280/97 ROSE Elektrotechnic [1999] ECR I‑689, paragraph 18). The part of the product must be sufficiently large to give the product its essential character (see, to that effect, Case C‑151/93 Voogd Vleesimport en -export [1994] ECR I‑4915, paragraph 20, and Case C‑401/93 Goldstar Europe [1994] ECR I‑5587, paragraphs 26 to 28).

39 It is clear from the explanatory notes that what differentiates the camcorders covered by subheading 8525 40 91 from those under subheading 8525 40 99 is the capability of the latter, in addition to the recording of sounds and images with the integrated camera or microphone, to be able to record sounds and images where they originate from sources other than the integrated camera or microphone. The essential characteristic of a camcorder classified under subheading 8525 40 99 is therefore, in particular, the DV-in function, that is to say its capability to record video signals from external sources.

40 That capability may be accessible directly by the user where the manufacturer has provided for easy activation of the DV-in function, that activation being explained in the instruction manual provided to the purchaser of the apparatus. If the procedure is not mentioned in the instruction manual, it is necessary, in order for the DV-in function to constitute the essential characteristic of the camcorder, that the modification can be effected easily by a user who lacks any special skills, without the camcorder being subjected to modification of its hardware. It is therefore necessary that, before activation of the DV‑in function, the camcorders have a structure containing the essential characteristics of that function and that the ways of enabling it to be active do not involve additional external hardware.

41 Furthermore, in order for a camcorder to be classified under subheading 8525 40 99, it is necessary, where the modification has been made and the DV‑in function is activated, that the camcorder functions in the same way as another camcorder expressly designed for the DV-in function. In particular, it is necessary that the camcorder may, in the same way as an expressly designed DV-in camcorder, be used to record external video signals independently, without relying on external hardware or software.

42 In the main proceedings, it is clear from the documents on the file and, in particular, from the expert reports commissioned by the national court, that the modification of the camcorders in order to activate the DV-in function is relatively complicated. It required an internet search for the instructions for operating the buttons (for Medion’s camcorders) or the purchase of software (for Canon’s camcorders) and, for all the camcorders, connection to a personal computer and the use of a number of accessories such as a ‘LANC’-cable. Furthermore, Medion and Canon submitted at the hearing that, even when the DV‑in function is activated, it is still necessary to connect the camcorder to a personal computer in order for it to be able to operate in that mode.

43 In light of those considerations, it is for the national court to determine the degree of complexity of the modifications to be made in order to activate the DV‑in function, and to establish the similarity and independent character of the functioning of the camcorders at issue in the main proceedings compared with camcorders presented as containing the DV-in function. If the national court takes the view that the activation of the DV-in function may easily be made by a user without special skills and without the camcorder being subjected to modification of its hardware, and if it establishes similar characteristics and independent functioning, the camcorders must be classified under subheading 8525 40 99. If those conditions are not fulfilled, the camcorders must be classified under subheading 8525 40 91.

44 Therefore, the answer to the questions referred must be that a camcorder may be classified under subheading 8525 40 99 of the CN only if the function for recording images and sounds from sources other than the integrated camera or microphone is active at the time of customs clearance or if, even though the manufacturer did not intend to promote that characteristic, that function may be activated subsequently by simple modification of the apparatus by a user who does not have special skills, without modification of the camcorder’s hardware. Where the camcorder is activated subsequently, it is also necessary, first, that, once activated, it functions in a manner similar to that of another camcorder whose function for recording images and sounds from sources other than the integrated camera or microphone is active at the time of customs clearance and, second, that it functions independently. The existence of those conditions must be capable of being ascertained at the time of customs clearance. It is for the national court to establish whether those conditions are fulfilled. If those conditions are not fulfilled the camcorder must be classified under subheading 8525 40 91 of the Combined Nomenclature.

Costs

45 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

A camcorder may be classified under subheading 8525 40 99 of the Combined Nomenclature in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Commission Regulation (EC) No 2263/2000 of 13 October 2000, Commission Regulation (EC) No 2031/2001 of 6 August 2001, and Commission Regulation (EC) No 1789/2003 of 11 September 2003, only if the function for recording images and sounds from sources other than the integrated camera or microphone is active at the time of customs clearance or if, even though the manufacturer did not intend to emphasise that characteristic, that function may be activated subsequently by simple modification of the apparatus by a user who does not have special skills, without modification of the camcorder’s hardware. Where the camcorder is activated subsequently, it is also necessary, first, that, once activated, it functions in a manner similar to that of another camcorder whose function for recording images and sounds from sources other than the integrated camera or microphone is active at the time of customs clearance and, second, that it functions independently. The existence of those conditions must be capable of being ascertained at the time of customs clearance. It is for the national court to establish whether those conditions are fulfilled. If those conditions are not fulfilled the camcorder must be classified under subheading 8525 40 91 of the Combined Nomenclature.

[Signatures]

*

Language of the case: German.