Inspecteur van de Belastingdienst – Douanedistrict Rotterdam

(Reference for a preliminary ruling from the Gerechtshof te Amsterdam)

(Tariff classification – Sterile flakes of polydimethilsiloxane – Silicone elastomer – Meaning of ‘primary form’ – Medicament – Packaging – Meaning of ‘appliance implanted in the body’)

Opinion of Advocate General Kokott delivered on 19 January 2006

Judgment of the Court (Second Chamber), 13 July 2006

Summary of the Judgment

Common Customs Tariff – Tariff headings – Sterile flakes of polydimethilsiloxane

Annex I to Regulation No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Regulation No 2388/2000, is to be interpreted as meaning that a product, such as the polydimethilsiloxane, made up of sterile flakes, specially developed and intended only to be implanted in the body for the treatment of a condition and which is packaged at the time of its presentation to customs in l kg bags, is to be regarded as an appliance to be implanted in the body which must be classified under heading 9021 of the Combined Nomenclature. Since the purpose of such a product is not to replace an organ but to enable a defective muscle to create connective tissues, it must be classified under subheading 9021 90 90 of the Combined Nomenclature.

(see para. 57, operative part)

13 Juillet 2006 (*)

(Tariff classification – Sterile flakes of polydimethilsiloxane – Silicone elastomer – Meaning of ‘primary form’ – Medicament – Packaging – Meaning of ‘appliance implanted in the body’)

In Case C-514/04,

REFERENCE for a preliminary ruling under Article 234 EC from the Gerechtshof te Amsterdam (Netherlands), made by decision of 30 November 2004, received at the Court on 15 December 2004, in the proceedings

Inspecteur van de Belastingdienst-Douanedistrict Rotterdam,

THE COURT (Second Chamber),

composed of C.W.A. Timmermans, President of the Chamber, J. Makarczyk, R. Schintgen, P. Kūris (Rapporteur) and J. Klučka, Judges,

Advocate General: J. Kokott,

Registrar: R. Grass,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–Uroplasty BV, by J. Bakker, Adviseur douanezaken,

–the Netherlands Government, by H.G. Sevenster and D.J.M. de Grave, acting as Agents,

–the Commission of the European Communities, by J. Hottiaux, acting as Agent, assisted by F. Tuytschaever, avocat,

after hearing the Opinion of the Advocate General at the sitting on 19 January 2006,

gives the following

1This reference for a preliminary ruling concerns the interpretation of headings 9021 and 3926 of the Combined Nomenclature (‘the CN’) 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 2388/2000 of 13 October 2000 (OJ 2000 L 264, p. 1, and corrigendum OJ L 276, p. 92).

2The questions were raised in the course of proceedings between Uroplasty BV (‘Uroplasty’) and the Inspecteur van de Belastingdienst–Douanedistrict Rotterdam (Customs Inspector of Rotterdam Customs District, ‘the Inspector’) concerning the tariff classification of a silicone elastomer in flakes which is developed and intended to be injected and become fixed in the human body in order to treat problems connected with incontinence.

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.

(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.

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

22 The gel ensures that the flakes are distributed evenly in the liquid and pass easily through the hypodermic needle. The hydrogel is evacuated from the body via the kidneys whereas the flakes persist and are held in place by the connective tissue which has developed for that purpose.

23 On 22 February 2001, Uroplasty applied to the Inspector for the issue of a binding tariff information (‘BTI’) for ‘polydimethilsiloxane in the form of white flakes’, which was analysed as such by the revenue department’s laboratory. Uroplasty sought its classification under subheading 9021 90 00 of the CN.

24 On 26 April 2001, the Inspector issued a BTI, with No NL-RTD-2001-000743, classifying the product under subheading 3910 00 00 of the CN. Uroplasty objected to that classification.

25 In addition, another BTI with No NL-RTD-2001-000909, which was provided to Uroplasty on 7 May 2001, concerns the syringes filled with a suspension of the product in question in a hydrogel. They were classified by the Inspector under subheading 9021 90 90 of the CN.

26 On 2 October 2001, the Inspector rejected Uroplasty’s objection to the BTI No NL-RTD-2001-000743.

27 On 13 November 2001, Uroplasty brought an action before the Tariefcommissie, now the Customs Chamber of the Gerechtshof te Amsterdam (Regional Court of Appeal, Amsterdam), against the Inspectors’s rejection.

28 Uroplasty claims that polydimethilsiloxane is identifiable by its special design and purity. It is a medical product the high price of which is due to its manufacturing process and patent. Polydimethilsiloxane corresponds to the description of ‘silicones in primary forms’ within the terms of Note 6(b) to Chapter 39 of the CN. However, since Note 2(r) to Chapter 39 states that the Chapter does not cover articles of Chapter 90 (which include, among others, medical or surgical instruments and apparatus), it is not classified under Chapter 39.

29 While the polydimethilsiloxane is certainly the active ingredient, it is used exclusively in the hypodermic syringe. It must therefore, pursuant to Note 2(b) to Chapter 90, be classified under subheading 9021 90 90 of the CN as a ‘part’ of the ready-for-use product.

30 On the other hand, according to the Inspector, the polydimethilsiloxane cannot be a part of a product since it is presented in the form of flakes which, having regard to Note 6(b) to Chapter 39 of the CN is a common form. The flakes are not present as such in the end product. They are a semi-finished product coming within heading 3910 of the CN as silicones in primary form. Only their mixture with a hydrogel enables them to become an implant which constitutes a new product.

31 Furthermore, the composition and presentation of the polydimethilsiloxane corresponds to that in the notes to Chapter 39 of the CN. Likewise, the price of that product is irrelevant to its classification as are its purity and sterility. Its end use is also irrelevant for the purposes of its classification as silicone.

32 The Inspector added that, since the polydimethilsiloxane is imported and processed under sterile conditions, it is possible that it may be used solely for medical purposes. Finally, since the product remains in the body, it cannot be classified under Chapter 30 of the CN as a pharmaceutical product.

33 It is clear from the referring court’s description that the mixture of polydimethilsiloxane with the hydrogel is temporary and intended solely to make it suitable for injection into the human body without changing its characteristics and properties. The polydimethilsiloxane is to be regarded as a finished product in that it is developed and intended for use as a medical/surgical implant.

34 Having regard to the preceding considerations, the referring court considers that the polydimethilsiloxane comes within heading 9021 of the CN but is uncertain, nevertheless, about the general classification rules which are to be applied and the subheading under which it should be classified.

35 Also, pursuant to the general classification rules set out, that court considers that the polydimethilsiloxane should be classified under subheading 9021 30 of the CN and, more precisely, pursuant to General Rule No 6 for the interpretation of the CN, under subheading 9021 30 90.

36 However, if classification under Chapter 90 is not possible, the polydimethilsiloxane cannot be regarded as silicone in primary form within the meaning of heading 3910, but must, on account of its production process, be classified as a product under heading 3926 as being ‘other articles’ of materials of heading 3910.

37 It was in those circumstances that the Gerechtshof te Amsterdam decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:

1 (a) Must heading 9021 of the [CN] be interpreted as meaning that a product consisting of sterile, white flakes of polydimethilsiloxane, specially developed and intended solely for use as a medical/surgical implant, can be classified under that heading?

(b) If so, under which subheading of heading 9021 of the [CN] must the product be classified?

The questions referred

38 By its first question, the referring court is asking, in essence, whether or not a product such as that in question in the main proceedings which, because of its nature, quality and form, is specially developed and used solely for a medical application, can be classified under heading 9021 of the CN, and, if so, within which subheading does the product come.

39 The Netherlands Government submits that the polydimethilsiloxane must be classified under heading 3910 of the CN relating to silicones in primary forms, whereas the Commission of the European Communities suggests classification under heading 3004 of the CN relating to medicaments. Finally, Uroplasty suggests classification under subheading 9021 90 90 of the CN relating to other orthopaedic appliances implanted in the body.

40 According to settled case-law, in the interests of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs tariff purposes is in general to be found in their objective characteristics and properties as defined in the wording of the relevant heading of the CN and of the notes to the sections or chapters (see, in particular, Case C‑42/99 Eru Portuguesa [2000] ECR I-7691, paragraph 13; Case C‑495/03 Intermodal Transports [2005] ECR I-8151, paragraph 47; Case C‑445/04 Possehl Erzkontor [2005] ECR I-0000, paragraph 19; and Case C-500/04 Proxxon [2006] ECR I-0000, paragraph 21).

41 The Explanatory Notes to the CN and those to the HS are an important aid for interpreting the scope of the various tariff headings but do not have legally binding force. The wording of those Notes must therefore be consistent with the provisions of the CN and cannot alter their scope (see, in particular, Case C‑130/02 Krings [2004] ECR I-2121, paragraph 28, Case C-467/03 Ikegami [2005] ECR I-2389, paragraph 17, and Proxxon paragraph 22).

42 For the purposes of classification under the appropriate heading, it is important, finally, to recall that the intended use of a product may constitute an objective criterion in relation to tariff classification if it is inherent in the product, and such inherent character must be capable of being assessed on the basis of the product's objective characteristics and properties (see Krings paragraph 30, Ikegami, paragraph 23, and Proxxon, paragraph 31).

43 In this case, as the Advocate General observed in paragraph 48 of her Opinion, the polydimethilsiloxane could be classified, either according to its essential characteristics, or according to its objective purpose under one of headings 3910, 3926, 3004 or 9021 of the CN.

44 As a silicone elastomer in flakes the polydimethilsiloxane is presented in the form referred to in Notes 3 and 6(b) to Chapter 39 of the CN. However, contrary to the Netherlands Government’s submission, silicone elastomer in flakes cannot be classified under heading 3910 as a ‘primary form’.

45 As the Advocate General pointed out in paragraph 50 of her Opinion, the concept of ‘primary form’, in the light of the structure of Chapter 39 of the CN and of Note 1(f) to Chapter 90 of the CN, encompasses only silicones intended to be processed. Primary forms are raw materials which are particularly suited to processing and are intended for it.

46 Polydimethilsiloxane presents the characteristics and objective properties of a product which, first, is sterile and, second, after being implanted in the body retains its particular dimensions, varying from 0.01 mm to around 5.0 mm. The product is specially developed and intended only to be implanted in the body for the treatment of sphincter weakness. It follows that polydimethilsiloxane is a finished product which, as such, cannot therefore be classified under heading 3910 of the CN.

47 In addition, contrary to Uroplasty’s submission, it must be held that the polydimethilsiloxane is not a part or accessory of a machine, instrument of apparatus within the meaning of Note 2(b) to Chapter 90 of the CN.

48 In view of the foregoing, the polydimethilsiloxane has a therapeutic profile. However, having regard to the terms of General Rule No 1 for the interpretation of the CN and contrary to the Commission’s submission, the polydimethilsiloxane cannot be classified under heading 3004 of the CN as ‘medicaments’.

49 It follows from the terms of heading 3004 of the CN that the classification of a product thereunder is conditional on its presentation in measured doses or packed for retail sale. The polydimethilsiloxane is imported in bags of a total weight of 1 kg. Its packaging in unit form in syringes for single use results from an operation carried out after importation. It follows that the polydimethilsiloxane, as it is presented to customs, does not come within the definition given in heading 3004 of the CN.

50 Since the product cannot be classified under the preceding headings, it must be determined whether, as the referring court considers, a finished product which is developed and intended for use as a medical/surgical implant can be classified under heading 9021 of the CN.

51 It is appropriate to point out that the terms of heading 9021 of the CN mention, among others, appliances to be implanted in the body.

52 As the Advocate General explained in paragraph 61 of her Opinion, the term ‘appliance’ is not restricted to the technical structure of a product. It must therefore be held that the term includes products which are intended to compensate for a defect by being implanted in the body within the meaning of heading 9021 of the CN.

53 It follows from paragraph 46 of this judgement that the characteristics and objective properties of the polydimethilsiloxane are those of a finished product, which is specially developed and intended only to be implanted in the body. By lodging itself definitively in the defective muscle, polydimethilsiloxane enables connective tissues to develop which compensate for the sphincter weakness. It follows that the product must be regarded as an appliance to be implanted in the body within the meaning of heading 9021 of the CN.

54 As regards, secondly, the subheading of heading 9021 of the CN under which the polydimethilsiloxane is to be classified, it must be observed that it follows from General Rule No 6 for the interpretation of the CN that the classification of goods in the subheadings of a heading is to be determined according to the terms of those subheadings and any related subheading notes.

55 It is stated in paragraph 46 of this judgment that after the polydimethilsiloxane is implanted in the body, the development of connective tissues results in the strengthening of the sphincter which is incapable of functioning on its own. The function of the polydimethilsiloxane, as pointed out in paragraph 53 of this judgment, is not therefore to replace a defective muscle in the human body as would a prosthesis, but to enable new tissues to develop which palliate the problems connected with incontinence. It follows that, as the referring court correctly considers, the function of the flakes does not correspond to the terms of subheading 9021 30 90 of the CN.

56 It also follows from paragraphs 52 and 53 of this judgment that the product is an appliance to be implanted in the body which, since it does not come within any of the other subheadings of heading 9021 of the CN, must therefore be classified under subheading 9021 90 90 of the CN as ‘other appliances’.

57 Having regard to all the foregoing considerations, the reply to the first question must be that Annex I to Regulation No 2658/87, as amended by Regulation No 2388/2000, is to be interpreted as meaning that a product, such as the polydimethilsiloxane, made up of sterile flakes, specially developed and intended only to be implanted in the body for the treatment of a condition and which is packaged at the time of its presentation to customs in l kg bags, is to be regarded as an appliance to be implanted in the body which must be classified under heading 9021 of the CN. Since the purpose of such a product is not to replace an organ but to enable a defective muscle to create connective tissues, it must be classified under subheading 9021 90 90.

58In the light of the reply to the first question, there is no need to answer the others.

Costs

59Since 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 (Second Chamber) hereby rules:

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 2388/2000 of 13 October 2000, is to be interpreted as meaning that a product, such as the polydimethilsiloxane, made up of sterile flakes, specially developed and intended only to be implanted in the body for the treatment of a condition and which is packaged at the time of its presentation to customs in l kg bags, is to be regarded as an appliance to be implanted in the body which must be classified under heading 9021 of the Combined Nomenclature. Since the purpose of such a product is not to replace an organ but to enable a defective muscle to create connective tissues, it must be classified under subheading 9021 90 90 of the Combined Nomenclature.

[Signatures]

*

Language of the case: Dutch.