OPINION OF MR ADVOCATE-GENERAL CAPOTORTI

DELIVERED ON 1 DECEMBER 1976 (*1)

Mr President,

Members of the Court,

1. The preliminary question submitted to the Court in these proceedings concerns the interpretation of the expression ‘ferro-alloys’- contained in heading 73.02 of the Common Customs Tariff. The Finanzgericht Düsseldorf requests the Court to define the scope of that expression so that it can settle a dispute between a Customs Office of the Federal Republic of Germany and the company LUMA, which has its registered office in Düsseldorf.

For a number of years that undertaking has imported from the United Kingdom ferrous scrap containing tungsten and cast in the form of slabs (known as ‘lumps’). On 20 October 1970 the Committee on Common Customs Tariff Nomenclature (established by Regulation No 97/69 of the Council of 16 January 1969) considered, at the request of the German delegation, the problem of the classification of alloy steel scrap containing tungsten which had been melted and cast in the form of ‘lumps’ (notched plates): the Committee expressed the opinion that since no heading of the Tariff expressly covered this product it must be treated as equivalent to ‘waste or scrap in ingot form’ and accordingly classified under subheading 73.15 B I (b) 1 (aa). From October 1970 to March 1972 the goods imported by the LUMA company — lumps of ferrous scrap containing approximately 30 % of tungsten and less than 10 % of cobalt — were accordingly classified as ‘waste or scrap in ingot form’ by the German customs authorities. However, on 23 March 1972 the said company imported a consignment of lumps of melted scrap containing between 30 and 33 % of tungsten and more than 10 % of cobalt. In view of this the Customs Office classified the goods under heading 73.02 G of the Common Customs Tariff, relating to ‘other’ ferro-alloys (that is, other than the ferro-alloys listed under subheadings A to F).

When proceedings were commenced for the annulment of this measure before the Finanzgericht Düsseldorf, the latter submitted to the Court, under Article 177 of the EEC Treaty, the following preliminary question:

‘Is the Common Customs Tariff to be interpreted to the effect that the expression “ferro-alloys” within the meaning of heading 73.02 read together with Note 1 (c) to Chapter 73 only means those products which were manufactured as such from new metals or ores and which are distinguished by reason of their intended use in the making of steel by an accurately predetermined, constant composition of specific alloy elements?

Or does heading 73.02 also include melted down scrap (material for re-melting) which satisfies the requirements as to composition laid down in Note 1 (c) to Chapter 73?’

2. Having regard to the dispute as to the facts which has given rise to the problem of interpretation now submitted to the Court as we have seen subheading 73.15 B I (b) 1 (aa) must be considered together with tariff heading 73.02.

In this connexion it should be noted that tariff heading 73.02 covers almost exclusively products coming under the Treaty establishing the European Economic Community whilst heading 73.15 B I (b) 1 (aa) relates to products coming under the ECSC Treaty. The question submitted by the national court under Article 177 of the EEC Treaty indeed makes a direct reference only to heading 73.02; nevertheless, it is clear that in determining the scope of headings of the Tariff in order to settle a dispute involving two similar headings which may be considered in classifying a given product, it may be necessary to establish the content of one in relation to the other and to draw a distinction between them. In cases of this nature it is impossible to avoid taking into consideration and thus interpreting the other tariff heading, albeit as a mere subordinate point, whether or not it relates to a product coming under the same Treaty. The Common Customs Tariff constitutes a single entity embracing products some of which come under the EEC Treaty, and others under the ECSC Treaty; the fact that concepts forming the basis of headings relating to very similar categories of goods necessarily complement one another means that it is impossible to interpret one whilst disregarding the others, even in the context of a preliminary question submitted under Article 177 of the Treaty of Rome. An attempt to interpret a heading of the EEC Customs Tariff by considering it in isolation for the sole reason that any heading which might complement it and in relation to which the meaning of the former would be determined concerns products coming under the ECSC Treaty and not the EEC Treaty would in fact be unrealistic and could lead to a completely contrived line of reasoning and to false results. The indivisible nature of the Tariff is furthermore confirmed by the fact that certain headings contain subheadings, some of which may be traced back to the EEC Treaty and others to the ECSC Treaty, as is indeed the case with heading 73.02.

3. The question submitted by the national court amounts to a clear choice concerning the interpretation of tariff heading 73.02: does it cover only products manufactured from new metals or ores, characterized by their constant and exact content of certain alloy elements or does it also include products obtained by melting (provided, naturally, that the substantive conditions laid down in Note 1 (c) to Chapter 73 obtain)? However, before tackling the problem in those terms I think it necessary to consider another alternative which, in view of the development of the facts in this case, seems logically to take precedence over that put forward by the national court: it is, precisely, to ascertain whether there are sufficient grounds for classifying the relevant products under heading 73.02 rather than heading 73.15, where they were previously classified.

In this respect it must first of all be emphasized that the classification made on 20 October 1970 by the Committee on Common Customs Tariff Nomenclature was based on the finding that no heading in the Tariff made specific provision for scrap of alloy steel, containing tungsten, and melted into slabs (‘lumps’). Perusal of the letter from the German delegation of 28 April 1970 initiating the proceedings before the Committee clarifies the reason for this finding: on the one hand, melted lumps differ from ingots (subheading 73.15 B I (b) 1 being entitled ‘ingots’); on the other hand, the tungsten content of such melted lumps is always less than 40 %. According to the letter of the German delegation it is precisely this last fact which prevents the product in question from being classified under heading 73.02: indeed, one of the subsidiary characteristics required for inclusion under this heading, in accordance with Note 1 (c) to Chapter 73 of the Common Customs Tariff, is a tungsten content of more than 40 %. In those circumstances the Committee felt obliged to suggest ‘assimilation’ to the category of ‘waste or scrap in ingot form’, in application of the General Rules for the interpretation of the nomenclature of the Common Customs Tariff, Rule No 5 of which in fact establishes that the foregoing rules relating to headings are also valid in determining the relevant subheading, while Rule No 4 requires that goods not falling within any heading of the Tariff be classified under the heading appropriate ‘to the goods to which they are most akin’. Moreover, a glance at the title of heading 73.15 and at Note 1 (d) to Chapter 73 is sufficient to establish that the classification effected on 20 October 1970 was no more than an ‘assimilation’ to a related heading: in fact, heading 73.15 relates to ferro-alloys (containing, inter alia, as is stated in the Note, 0.30 % or more of tungsten), subheading B I (b) 1 to ingots of alloy steel and only in the subsequent subheading (aa) is reference made to waste or scrap in ingot form, which is a product similar in some respects but differing in others from lumps of melted scrap.

4. On the other hand, the content of tariff heading 73.02, ferro-alloys, is so defined in Note 1 (c) to Chapter 73 that lumps of melted scrap seem to be directly covered thereby if they contain one of the stated alloy elements in the requisite proportions. Indeed, according to that note ‘Alloys of iron … which are not usefully malleable and are commonly used as raw material in the manufacture of ferrous metals and which contain, by weight, separately or together: more than 8 % of silicon, or more than 30 % of manganese, or more than 30 % of chromium, or more than 40 % of tungsten, or a total of more than 10 % of other alloy elements’ shall be considered as ferro-alloys. It is clear that if the lumps of ferrous scrap do not contain the given minimum percentages of those elements heading 73.02 does not apply; but as soon as those elements are found to be present that heading is applicable, since the definition of ferro-alloys seems closer to the other characteristics of lumps of melted scrap than to the concept of ‘alloys of steel’. In the present case the tungsten content has never exceeded 40 %, but when the cobalt content exceeded 10 % the required alternative condition concerning the presence of more than 10 % of ‘other alloy elements’ was met. Heading 73.02 does not lay down other material characteristics: it is sufficient to consider the wording of subheading G: after a list of specific alloys such as ferro-manganese, ferro-aluminium, ferrosilicon etc., there is a general reference to ‘other’, that is, all ferro-alloys which cannot be brought under specific subheadings.

5. We shall now consider the choice, put forward by the national court, between the two possible interpretations of the scope of heading 73.02. This choice clearly takes account of the views advanced by the undertaking Luma before the court dealing with the substance of the case; namely, from the technical point of view the imported products differ clearly from the ferro-alloys mentioned in heading 73.02. In fact, the imported products are produced merely by melting, whilst ferro-alloys are principally obtained by electrothermal or thermit processes and are moreover usually obtained from new metals and ores and produced by special techniques since they must contain particular alloy elements in constant proportions, whilst it is impossible to maintain such constant proportions when scrap, is melted because of the presence of large quantities of slag.

In the observations which it has submitted in these proceedings the Commission appears to concede that the technical concept of ferro-alloy referred to by the Luma undertaking is correct; the Commission nevertheless points out that in the said Note 1 (c) to Chapter 73 the Common Customs Tariff adopts a different definition of ferro-alloy. The requirements of customs administration led in substance to a preference for a concept based essentially on the composition of the goods, that is on elements which it is easier to ascertain objectively. The Commission accordingly concludes by vindicating the classification of the product in question under heading 73.02, in accordance with the decision of the German customs authority, since its cobalt content is higher than 10 %.

The undertaking LUMA has put forward another argument, of an economic nature.

It stated that the presence in a consignment of melted scrap of a percentage of cobalt slightly above the average was purely fortuitous. According to LUMA a circumstance of this nature does not justify altering the usual classification of the goods so that they come under a heading (73.02 G) involving a duty of 7 %, after a long period during which they were classified as ‘waste or scrap in ingot form’ and therefore duty-free. Furthermore — and at this point the economic and technical arguments coincide — the goods in question are always produced by the same technique, and have the same use and the same economic value as the product normally imported by LUMA (and that value seems to be perceptibly less than the usual value of ferro-alloys).

In that ruling the Court adapted the principle to the special requirements of the classification of goods which could not readily be distinguished on the basis of their outward, objective characteristics from other goods (the case concerned wild reindeer which, when slaughtered, are indistinguishable from domestic reindeer). The Court held that the fact that reindeer are wild could be ascertained in another way, for example, through the issue by the competent authorities of certificates of origin capable of establishing the nature of the goods, and once this was ascertained the goods could be given different customs treatment from that accorded to domestic reindeer; in this the Court undoubtedly departed from the strict criterion whereby products are classified in the Common Customs Tariff on the basis of the objective characteristics which they display when imported.

This ruling is however justified in view of the fact that the difference between the two types of animal existing before they are slaughtered is reflected in their different treatment under the Tariff. In other words the derogation from the general rule whereby customs classification is to be effected on the basis of the objective characteristics and properties of the goods, independently of the use for which they are intended and of the method whereby they were produced, was necessary in order to take account of the emphasis which the Common Customs Tariff places, in making provision for the heading ‘game’, upon whether the animal in question lives in the wild state or is domesticated.

However, no such justification is available in the present case. This is decisively confirmed by the Notes Explicatives du Tarif Douanier Commun, drawn up by the Commission of the European Communities, in which, with regard to heading 73.03, it is stated that waste and scrap metal, re-melted and simply cast into ingots and known as ‘waste or scrap in ingot form’ shall be considered for the purposes of the Tariff as ferro-alloys or as ingots and thus classified ‘according to its composition’ under the various subheadings of heading 73.02, or under heading 73.06 or subheadings 73.15 A I (b) 1 or 73.15 B I (b) 1 (aa).

Thus in classifying the product in question it does not appear possible to take account of the various considerations of a technical or economic nature even though, as we have seen, in a case like this which is limited to the consignment of goods in question the outcome may, from an economic point of view, appear too harsh.

6.In conclusion, I suggest that the Court should reply to the request for an interpretation submitted on 30 April 1976 by the Finanzgericht Düsseldorf under Article 177 of the EEC Treaty by ruling that heading 73.02 of the Common Customs Tariff also includes lumps of melted down scrap which contains the appropriate materials, mentioned in Note 1 (c) to Chapter 73.

* Language of the case: English.

ECLI:EU:C:2025:140

Translated from the Italian.