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Judgment of the Court (Third Chamber) of 18 July 2007.#Olicom A/S v Skatteministeriet.#Reference for a preliminary ruling: Østre Landsret - Denmark.#Common Customs Tariff - Tariff headings - Classification in the combined nomenclature - Automatic data processing machines - Combined network/modem cards - Definition of ‘specific function’.#Case C-142/06.

ECLI:EU:C:2007:449

62006CJ0142

July 18, 2007
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(Reference for a preliminary ruling from the Østre Landsret)

(Common Customs Tariff – Tariff headings – Classification in the combined nomenclature – Automatic data processing machines – Combined network/modem cards – Definition of ‘specific function’)

Opinion of Advocate General Mazák delivered on 6 March 2007

Judgment of the Court (Third Chamber), 18 July 2007

Summary of the Judgment

Common Customs Tariff – Tariff headings

Combined cards designed to be inserted into portable computers which, because they have a modem function, can be used for data exchange over external networks, must, after 1 January 1996, be classified as data-processing machines under heading No 8471 of the Combined Nomenclature of the Common Customs Tariff, contained in Annex I to Regulation No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Regulation No 3009/95.

They fulfil the three conditions laid down by Note 5(B) to Chapter 84 of the Combined Nomenclature since they are used solely when inserted in portable computers, they work only if they are connected to that type of computer and are capable of converting incoming signals into data usable by an automatic data-processing machine and outgoing signals into data usable externally, whether they are transmitted across a local network (LAN) or an external network (WAN).

Such cards do not perform a ‘specific function’ within the meaning of Note 5(E) to Chapter 84 of the Combined Nomenclature. The ‘specific function’ performed by a machine working with an automatic data-processing machine must be a function ‘other than data-processing’. Since the combined cards are designed to transfer data between a number of computers and, in order to do so, render incoming external signals comprehensible to the computer and transform outgoing signals processed by it into signals usable externally, regardless of whether the signal received or emitted is analogue or digital, the function which they perform consists of data-processing.

(see paras 22, 25, 30, 32, operative part)

18 July 2007 (*)

(Common Customs Tariff – Tariff headings – Classification in the combined nomenclature – Automatic data processing machines – Combined network/modem cards – Definition of ‘specific function’)

In Case C‑142/06,

REFERENCE for a preliminary ruling under Article 234 EC, by Østre Landsret (Denmark), made by decision of 9 March 2006, received at the Court on 16 March 2006, in the proceedings

Skatteministeriet,

THE COURT (Third Chamber),

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

Advocate General: J. Mazák,

Registrar: R. Grass,

having regard to the written procedure,

after considering the observations submitted on behalf of:

– the Danish Government, by J. Molde, acting as Agent, and by P. Biering, advokat,

– the Commission of the European Communities, by J. Hottiaux, acting as Agent, and by P. Heidmann, advokat,

after hearing the Opinion of the Advocate General at the sitting on 6 March 2007,

gives the following

This reference for a preliminary ruling concerns the interpretation of Note 5(E) to Chapter 84 of the Combined Nomenclature of the Common Customs Tariff, contained 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 3009/95 of 22 December 1995 (OJ 1995 L 319, p. 1) (‘the CN’).

The reference was made in the course of proceedings between Olicom A/S (‘Olicom’), a company established in Denmark, and Skatteministeriet (Danish Ministry of Taxation and Excise) regarding the tariff classification of certain network cards with a modem function.

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.

ECLI:EU:C:2025:140

(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.

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

[1997] ECR I‑7363, paragraph 12; and <i>Peacock</i>, paragraph 10).

18Finally, for the purposes of classification under the appropriate heading, it should be recalled that 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 <i>Thyssen Haniel Logistic</i> [1995] ECR I‑1381, paragraph 13, <i>DFDS</i>, paragraph 29, and Case C‑183/06 <i>RUMA</i> [2007] ECR I‑0000, paragraph 36).

19It should be noted first of all that, in paragraph 23 of its judgment in <i>Peacock</i>, the Court held that, between July 1990 and May 1995, network cards designed to be installed in automatic data-processing machines were to be classified under heading No 8471 as units of machines of that type.

20The Court also held, in paragraphs 16 to 20 of the judgment in <i>Peacock</i>, that network cards are designed solely for automatic information processing machines, that they are directly connected to those machines and that their function is to supply and accept data in a form which those machines can use. From this it inferred that network cards are comparable to any other medium whereby an automatic data processing machine accepts or delivers data in the sense that they have no function which they would be capable of performing without the assistance of such a machine. Accordingly, the final subparagraph of Note 5(B) to Chapter 84 of the CN, in the version in force prior to 1 January 1996, could not preclude them from being classified under heading No 8471, given that they do not perform any specific function. Furthermore, network cards satisfy the conditions relating to ‘units’ set out in that note, since they can be connected to the central unit and are specifically designed as parts of an automatic data-processing system.

21That interpretation was confirmed in paragraphs 16 and 17 of the judgment in <i>Cabletron</i>, in which the Court also made clear, in paragraph 27, that the network cards referred to in point 4 of the Annex to Regulation No 1165/95, that is to say cards for incorporation in cable-linked digital computers enabling the exchange of data over a local network without using a modem, were to be classified under heading No 8471 of the CN both before and after 1 January 1996.

22Secondly, it is appropriate to consider whether the case-law referred to in paragraphs 19 to 21 of the present judgment may also apply to the combined cards which, because they have a modem function, can be used for data exchange over external networks.

23In this case, the wording of heading No 8471 of the CN refers, inter alia, to automatic data-processing machines and their units, whereas that of heading No 8517 covers, inter alia, telecommunication apparatus for carrier-current line systems or for digital line systems.

24It follows from Note 5(B) to Chapter 84 of the CN that automatic data-processing machines may be in the form of systems consisting of a variable number of separate units. Subject to Note 5(E) to that chapter, a unit is to be regarded as being a part of a complete system if it meets simultaneously three conditions, that is to say, firstly, that it is of a kind solely or principally used in an automatic data-processing system, secondly, that it is directly or indirectly connectable to the central processing unit, and, thirdly, that it is able to accept or deliver data in a form which can be used by the system. Note 5(C) to that chapter adds that separately presented units of an automatic data-processing machine are to be classified under heading No 8471.

25Like the network cards which were the subject of the judgments in <i>Peacock</i> and <i>Cabletron</i>, the combined cards, according to the description in the file, simultaneously meet those three conditions since they are used solely when inserted in portable computers, they work only if they are connected to that type of computer and are capable of converting incoming signals into data usable by an automatic data-processing machine and outgoing signals into data usable externally, whether they are transmitted across a local network (LAN) or an external network (WAN).

26The Danish Government and the Commission of the European Communities take the view, however, that, because they are able independently to transfer information in the form of data communication in a line telephony network, without using the portable computers to which they are connected, those cards have a specific function within the meaning of Note 5(E) to Chapter 84 of the CN. Since it is not possible to determine the primary function of such combined cards in accordance with Note 3 to Section XVI of the CN, the correct tariff heading must be decided by application of Rule No 3(c) of the General Rules for the interpretation of the CN, according to which goods are to be classified under the heading which occurs last in numerical order among those which equally merit consideration. It follows that the combined cards should be classified under heading No 8517 as telecommunication apparatus.

27That argument cannot be accepted.

28Firstly, although the combined cards can transfer information in the form of data communication in a line telephony network because they have a modem function, that does not mean, contrary to the submissions of the Danish Government and the Commission, that they are able to do so in an autonomous way or that they can operate independently without using the portable computer to which they are connected.

29It is apparent from the file, firstly, that the modem function of a combined card is operational only if it is connected to an automatic data-processing machine, which transmits to it the necessary instructions and data and, secondly that that function cannot operate without the LAN function, whereas the latter remains operational even if the WAN function is disabled.

30Secondly, it follows from the wording of Note 5(E) to Chapter 84 of the CN that the ‘specific function’ performed by a machine working with an automatic data-processing machine must be a function ‘other than data-processing’. Since the combined cards are designed to transfer data between a number of computers and, in order to do so, render incoming external signals comprehensible to the computer and transform outgoing signals processed by it into signals usable externally, regardless of whether the signal received or emitted is analogue or digital, the function which they perform consists of data-processing. It follows that such cards do not perform a ‘specific function’ within the meaning of that note.

31Thirdly, although it is true that, at the time of the facts at issue in the main proceedings, the explanatory notes to the Harmonised System of the World Customs Organisation relating to heading No 8517 expressly included modulator-demodulator apparatus amongst telecommunication apparatus for carrier-current line systems or for digital line systems, the fact remains that, according to established case-law, those explanatory notes are an important aid to the interpretation of the scope of the various tariff headings but do not have legally binding force. The content of those notes must therefore be compatible with the provisions of the CN and may not alter the scope of those provisions (see, inter alia, <i>Intermodal Transports</i>, paragraph 48; Case C‑445/04 <i>Rossehl Erzkontor</i> [2005] ECR I‑10721, paragraph 20; and Case C‑500/04 <i>Proxxon</i> [2006] ECR I‑1545, paragraph 22).

32In the light of all of the foregoing, the answer to the first question must be that combined cards designed to be inserted into portable computers must, after 1 January 1996, be classified as data-processing machines under heading No 8471 of the CN.

The second question

33The second question was referred only in case the Court should consider that the modem function of the combined cards constituted a specific function. In the light of the answer given to the first question, there is no need to examine the second question.

Costs

34Since 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:

Combined cards designed to be inserted into portable computers must, after 1 January 1996, be classified as data-processing machines under heading No 8471 of the Combined Nomenclature of the Common Customs Tariff, contained 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 3009/95 of 22 December 1995.

[Signatures]

*

Language of the case: Danish.

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