(Reference for a preliminary ruling from the Administratīvā apgabaltiesa)

(Common Customs Tariff – Tariff classification – Combined Nomenclature – Active matrix liquid crystal devices)

Summary of the Judgment

Common Customs Tariff – Tariff headings – Active matrix liquid crystal devices of a certain type

(Council Regulation No 2658/87, Annex I; Commission Regulation No 1789/2003)

Subheading 8528 21 90 of the Combined Nomenclature constituting Annex I to Regulation No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Regulation No 1789/2003, must be interpreted as not applying, as at 29 December 2004, to active matrix liquid crystal devices (LCD) principally made up of the following elements:

–two glass plates;

–a layer of liquid crystal inserted between the two plates;

–vertical and horizontal signal drivers;

–backlight;

–inverter providing high-voltage power for backlight;

–control block – data transmission interface (control PCB or PWB) to ensure sequential transmission of data to each pixel (dot) of the LCD unit using specific technology – LVDS (low-voltage differential signalling).

Since their end use depends on the additional parts added to them during the next stage of manufacture, such devices do not have the essential character of the complete or finished article, for the purposes of subheading 8528 21 90 of the Combined Nomenclature.

However, those devices may, as parts which can be used in apparatus coming under heading 8528, be classified under heading 8529 of the Combined Nomenclature (‘Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528’) and more specifically under subheading 8529 90 81 thereof. It is for the national court to ascertain whether those devices have the objective characteristics and properties necessary to be regarded as parts suitable for use solely or principally with the apparatus of headings 8525 to 8528 of the Combined Nomenclature.

(see paras 27-32, operative part)

11 June 2009 (*)

(Common Customs Tariff – Tariff classification – Combined Nomenclature – Active matrix liquid crystal devices)

In Case C‑16/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Administratīvā apgabaltiesa (Latvia), made by decision of 13 December 2007, received at the Court on 15 January 2008, in the proceedings

Valsts ieņēmumu dienests,

THE COURT (Sixth Chamber),

composed of J.-C. Bonichot, President of the Chamber, K. Schiemann (Rapporteur) and C. Toader, Judges,

Advocate General: J. Kokott,

Registrar: R. Grass,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–Schenker SIA, by E. Āboliņa, authorised representative,

–Valsts ieņēmumu dienests, by D. Jakāns, acting as Agent,

–the Hungarian Government, by R. Somssich, J. Fazekas and K. Borvölgyi, acting as Agents,

–the Commission of the European Communities, by G. Wilms and E. Kalnins, acting as Agents,

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

gives the following

This reference for a preliminary ruling relates to the interpretation of the Combined Nomenclature constituting 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 1789/2003 of 11 September 2003 (OJ 2003 L 281, p. 1; ‘the CN’).

The reference has been made in the course of proceedings between Schenker SIA (‘Schenker’) and Valsts ieņēmumu dienests (Latvian tax administration; ‘the VID’) concerning the tariff classification of certain active matrix liquid crystal devices (LCD).

Legal context

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

It is apparent from the documents submitted to the Court that those devices are constituted of two glass plates, a layer of liquid crystal inserted between the two plates, vertical and horizontal signal drivers, a backlight, an inverter providing high-voltage power for the backlight and, finally, a control block – data transmission interface (control PCB or PWB) to ensure sequential transmission of data to each pixel (dot) of the LCD unit using specific technology – LVDS (low-voltage differential signalling).

14When Schenker’s declaration regarding those parts was checked, the Rīgas Muitas reģionālā iestāde (Riga Region Customs Office) of the VID was doubtful as to whether the subheading of the CN given was correct. Samples were therefore retained and sent to the appropriate customs service in order to establish the applicable code of the CN. The customs officials took the view that the correct tariff classification was subheading 8528 21 90 and not the classification used by Schenker, namely subheading 9013 80 20. The rate of import duty corresponding to the classification used by the VID which, in the view of that administration, should have been applied to the parts is 14%.

15Consequently, on 24 February 2005, the VID adopted a decision by which it held that Schenker had committed an administrative infringement on the basis of the provisions of the Latvian Administrative Infringements Code and imposed on it a fine of LVL 300, which decision was confirmed by the Director-General of the VID on 7 June 2005.

16On 11 July 2005, Schenker brought an action before the Administratīvā rajona tiesa (District Administrative Court) for annulment of the decision of the Director-General of the VID submitting, essentially, that the parts at issue in the main proceedings should not have been classified under subheading 8528 21 90 of the CN, that is to say, as finished articles within the meaning of the CN, since they are not equipped with any interfaces for the transmission or reception of video signals.

17On 12 May 2006, the Administratīvā rajona tiesa dismissed Schenker’s action. While agreeing with Schenker that the parts in question must not be declared as complete or finished articles, that court held that the technical documentation before it shows that they contain the principal components which ensure performance of the basic function of the parts, namely the transmission of data. The classification made by the VID is therefore justified, since the parts constitute incomplete or unfinished articles which already have the essential character of the complete article.

On 2 June 2006, Schenker lodged an appeal before the Administratīvā apgabaltiesa (Administrative Court of Appeal). That court, having regard to the doubts which it entertained as to the tariff classification of the parts at issue in the main proceedings, decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

‘Must [sub]heading [8528 21 90] of the Combined Nomenclature be interpreted as meaning that, as at 29 December 2004, it was also applicable to active matrix liquid crystal devices (TFT LCD – LTA320W2‑L01, LTA260W1‑L02, LTM170W1‑L01) principally made up of the following elements:

–two glass plates;

–a layer of liquid crystal inserted between the two plates;

–vertical and horizontal signal drivers;

–backlight;

–inverter providing high-voltage power for backlight;

–control block – data transmission interface (control PCB or PWB) to ensure sequential transmission of data to each pixel (dot) of the LCD unit using specific technology – LVDS (low-voltage differential signalling)?’

The question referred for a preliminary ruling

Arguments of the parties

19Schenker submits, essentially, that the devices at issue in the main proceedings are not intended for a single, specific use and can be used to manufacture numerous articles, such as computers, video monitors, televisions, electronic signs, medical installations, automatic monitoring installations or game machines. For that reason, those devices do not fall within subheading 8528 21 90 of the CN which covers video monitors and, more generally, finished articles.

20The VID and the Commission contend, however, that the devices at issue in the main proceedings, since they include additional parts not listed in subheading 9013 80 20 of the CN, such as a backlight, an inverter providing high-voltage power for the backlight and a control block ensuring sequential transmission of data to each pixel, cannot be classified in that subheading.

21Moreover, the VID submits that the devices in question are able to receive and display video images and so technically can perform the principal function of a video monitor. Accordingly, in accordance with the General Rule set out in Section I(2)(a) of Part I A of the CN, they can be regarded as unfinished or incomplete articles equivalent to finished/complete articles and therefore as coming under subheading 8528 21 90 of the CN covering video monitors.

22For its part, the Commission submits that, in accordance with the relevant Explanatory Note to the HS, the parts at issue in the main proceedings, which can be regarded as parts intended for machines coming under heading 8528 of the CN, must be classified under heading 8529 and more specifically under subheading 8529 90 81 of the CN.

23In the view of the Hungarian Government, the devices in question do not have the essential characteristics of the completed or finished article since, at this stage, it is not yet possible to determine in which type of finished article those devices will be used. Consequently, the most appropriate heading of the CN would be heading 9013.

Findings of the Court

24First of all, it is settled case-law that, in the interests of legal certainty and ease of verification, the decisive criterion for the classification of parts 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 in the section or chapter notes (see, inter alia, Case C‑142/06 Olicom [2007] ECR I‑6675, paragraph 16, and the case-law cited).

25In addition, the intended use of an article may constitute an objective criterion for classification if it is inherent to the article, and that inherent character must be capable of being assessed on the basis of the article’s objective characteristics and properties (see Case C‑403/07 Metherma [2008] ECR I‑0000, paragraph 47).

26Both the notes which head the chapters of the Common Customs Tariff and the Explanatory Notes to the HS are important means of ensuring the uniform application of the tariff and as such may be regarded as useful aids to its interpretation (Joined Cases C‑362/07 and C‑363/07 Kip Europe and Others [2008] ECR I‑0000, paragraph 27).

27In the present case, having regard to the description of the parts at issue in the main proceedings supplied by the national court, their characteristics do not correspond to subheading 9013 80 20 of the CN, which covers ‘active matrix liquid crystal devices’. The devices at issue in the main proceedings are in fact also equipped with parts not listed in that heading, including, inter alia, a backlight, an inverter providing high-voltage power for the backlight and a control block ensuring sequential transmission of data to each pixel. Those devices may have a number of intended uses, but different vital components must be added to them in order for those parts to acquire the basic characteristics of a complete article. Thus, nor is subheading 8528 21 90 of the CN, which covers ‘video monitors’, that is to say, finished articles, the appropriate subheading for classification of the liquid crystal devices at issue in the main proceedings.

28It is true that, under the rule stated in Section I(2)(a) of Part I A of the CN, a particular heading covers an incomplete or unfinished article, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. Such does not appear to be the case with the items at issue in the main proceedings since their end use depends on the additional parts added to them during the next stage of manufacture.

29Consequently, the liquid crystal devices at issue in the main proceedings cannot be classified under subheadings 9013 80 20 or 8528 21 90 of the CN.

30However, those devices may, as parts which can be used in apparatus coming under heading 8528 of the CN (‘Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors’), be classified, in accordance with the Explanatory Notes to the HS relating to heading 8528, under heading 8529 of the CN (‘Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528’), more specifically under subheading 8529 90 81 (‘for television cameras of subheading 8525 30 and apparatus of headings 8527 and 8528’).

31It is for the national court to ascertain whether the liquid crystal devices at issue in the main proceedings have the objective characteristics and properties necessary to be regarded as parts suitable for use solely or principally with the apparatus of headings 8525 to 8528 of the CN.

32Consequently, the answer to the question referred must be that subheading 8528 21 90 of the CN must be interpreted as not applying, as at 29 December 2004, to active matrix liquid crystal devices (LCD) principally made up of the following elements:

–two glass plates;

–a layer of liquid crystal inserted between the two plates;

–vertical and horizontal signal drivers;

–backlight;

–inverter providing high-voltage power for backlight;

–control block – data transmission interface (control PCB or PWB) to ensure sequential transmission of data to each pixel (dot) of the LCD unit using specific technology – LVDS (low-voltage differential signalling).

Costs

33Since 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 (Sixth Chamber) hereby rules:

Subheading 8528 21 90 of the Combined Nomenclature constituting 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 1789/2003 of 11 September 2003, must be interpreted as not applying, as at 29 December 2004, to active matrix liquid crystal devices (LCD) principally made up of the following elements:

–two glass plates;

–a layer of liquid crystal inserted between the two plates;

–vertical and horizontal signal drivers;

–backlight;

–inverter providing high-voltage power for backlight;

–control block – data transmission interface (control PCB or PWB) to ensure sequential transmission of data to each pixel (dot) of the LCD unit using specific technology – LVDS (low-voltage differential signalling).

[Signatures]

*

Language of the case: Latvian.