Court of Justice 15-11-1984 ECLI:EU:C:1984:350

Facts and written procedure

1. On 23 September 1977 the University of Hamburg presented to the Hauptzollamt München-West for release into free circulation in the Community two precision rotors and a multiple contact switch unit imported from the United States of America and intended for incorporation into a model E analytical ultracentrifuge which was being manufactured by the firm of Beckmann in Hannover.

The ultracentrifuge is designed to analyse molecular weight distribution in synthetic and natural polymers. It is composed essentially of the following parts:

1. The centrifuge itself, consisting of the propulsion mechanism (“drive”), comprising an electric motor with transmission and instruments for measuring and regulating the speed, and the rotor chamber with rotor;

2. A system for cooling (refrigeration unit) and heating (resistance wire) the rotor chamber and for measuring and regulating the temperature;

3. Oil and diffusion pumps for emptying the rotor chamber;

4. Two optical systems (an ultra-violet optical system and a Schlieren/Interference optical system) comprising light sources, lenses and other optical components as well as photographic and electronic apparatus, including the multiple contact switch unit.

The rotors are made of titanium, a light, highly resistant material, and are specially shaped so as to stabilize rotation and prevent vortical movement. The bases of the rotors are fitted with a thermistor needle for measuring the temperature in the rotor. Variations in the resistance of the needle produced by fluctuations in temperature are transmitted to the regulating mechanism through a small container of mercury in the rotor chamber in order to maintain a constant temperature in the rotor's armour-plated chamber. Measuring cells (sensors) are inserted in slots containing solutions of the materials for analysis; each rotor is equipped with either two or four slots.

The multiple contact switch unit consists essentially of a large number of electrical and electronic components.

As a result of the extremely fast acceleration of the rotor (up to 68 000 revolutions per minute), the measuring cells (sensors) themselves accelerate by up to 200 000 times the speed of gravitational acceleration. Under the influence of the huge gravitational field, the separated molecules drift towards the base of the apparatus. The speed at which the molecules travel varies according to their nature and they are thus separated. By measuring those processes it is possible to ascertain molecular weight distribution. Optical systems are used to project a beam of light through the measuring cells and measure, with the aid of a large number of subsidiary components, the optical difference in the refractive index of the solution of the substances for analysis and of the solvent. Those measurements are recorded on a photo-sensitive plate and it is thus possible to ascertain the different speeds at which the molecules travel by means of a large number of exposures. At the same time the optical signals are recorded on paper in the form of a graph with the aid of other equipment. The multiple contact switch unit makes it possible to select certain measuring cells and phases during the process.

By decision of 26 September 1977, the Hauptzollamt admitted free of customs duty the rotors and the multiple contact switch unit imported by the University of Hamburg.

On the strength of an examination conducted by the Zolltechnische Prüflings- und Lehranstalt München [Customs Laboratory and Training College, Munich], the Hauptzollamt served a notice of reassessment dated 8 November 1979 on the University of Hamburg demanding payment of customs duty of DM 1 458,50 for the rotors and of DM 2 345,20 for the multiple contact switch unit, in addition to the proportionate import turnover tax payable thereon of DM 418,30.

That decision was justified by the consideration that the rotors and the multiple contact switch unit were not in themselves of a scientific character and, therefore, could not be admitted free of duty under Article 3 (1) of Regulation (EEC) No 1798/75 of the Council of 10 July 1975 on the importation free of Common Customs Tariff duties of educational, scientific and cultural materials (Official Journal 1975, L 184, p. 1). Article 3 (2) of that Regulation was also inapplicable, in the Hauptzollamťs view, on the ground that components, spare parts and accessories required for the operation of scientific instruments and apparatus could be admitted free of duty only if the principal item had also been imported free of duty, which had not been done in the present case.

The University of Hamburg filed an objection which was dismissed and it then brought an action against the notice of reassessment of 8 November 1979 before the Finanzgericht München.

The University of Hamburg contended essentially that the imported materials in themselves were, in the light of their objective characteristics, of a scientific character and that, moreover, it was wrong to make the duty-free admission of components, spare parts and accessories conditional on the principal apparatus being imported free of duty.

Taking the view that the questions of interpretation raised by Article 3 (1) and (2), of Regulation No 1798/75 had to be resolved before it could give judgment in the case before it and that those questions were also relevant to several other cases pending before it, the Finanzgericht München, by order of its Third Senate of 6 October 1983, decided pursuant to Article 177 of the EEC Treaty to stay the proceedings pending a preliminary ruling by the Court of Justice on the following questions:

1. How is Article 3 (1) of Regulation No 1798/75 of 10 July 1975 (in its original version) to be interpreted as regards the phrase “scientific instruments and apparatus”?

   1. Can it also include materials which are components, spare parts or accessories of a unit of equipment?

   If Question 1 is answered in the affirmative :

   1. Does the phrase “instruments and apparatus” include materials of all kinds or only those which are so designed that they can be used for performing a specific operation or for producing specific effects in relation to other materials? What other criteria, if any, are decisive for the definition of that phrase?

   2. In the case of materials which are components, spare parts or accessories of a unit of equipment, does the question whether they are instruments or apparatus depend on whether, in relation to that unit of equipment or its other components, they are

      1. structurally autonomous (for example, they have their own casing, their own baseplate or the like) and/or

      2. they perform an independent function?

   If Question 3 (a) is answered in the negative and Question 3 (b) is answered in the affirmative:

   1. Where a component, spare part or accessory performs an independent function within a unit of equipment, is the decisive factor whether it is capable of working on its own, thus, in particular, whether in addition to the operative component itself, it also contains the propulsion mechanism therefor?

   1. Is the decisive factor as regards the scientific character of instruments and apparatus which are components of a unit of equipment, whether those instruments and apparatus, viewed in themselves, serve scientific purposes, particularly in the light of their own characteristics and the functions (or parts of functions) performed by them, or is their scientific character established by the mere fact that the unit of equipment of which they form part is scientific and that, since they are specific components of that unit, they can be employed only in conjunction with it and thus, like it, they are used mainly or exclusively for scientific research?

2. How is Article 3 (2) of Regulation No 1798/75 to be interpreted?

   1. Does the phrase “required for the operation of scientific instruments and apparatus” mean that

      1. the instruments and apparatus are incapable of functioning without the component, spare part or accessoiy concerned; or is the decisive factor whether

      2. the components, spare parts or accessories arc specially made for or adapted to the instruments and apparatus concerned and are therefore components, spare parts or accessories specific to those instruments or apparatus?

   2. Does the phrase “which quality for duty-free admission” entail that the instruments and apparatus for the operation of which the components, spare parts or accessories are required:

      1. are or were themselves imported, or is it sufficient that they

      2. satisfy the requirements laid down for admission free of Common Customs Tariff duties, with the result that Article 3 (2) of Regulation No 1798/75 applies even where some of the components of the instruments and apparatus are imported from a non-member countiy and some are manufactured in the Community, provided that no instruments or apparatus of scientific value equivalent to that of the instruments and apparatus assembled from those components are manufactured in the Community?

The order of the Finanzgericht München was lodged at the Court Registry on 20 October 1983.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 30 January 1984 by the Commission of the European Communities, represented by Jörn Sack, a member of its Legal Department.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. It did, however, put a question to the Commission asking for a reply in writing which was duly furnished within the period prescribed.

By order of 14 March 1984 the Court decided, pursuant to Article 95 (1) and (2) of its Rules of Procedure, to assign the case to the Second Chamber.

Written observations submitted to the Court

In the Commision's view, it would be useful if the Court's interpretation of Regulation No 1798/75 were as comprehensive as possible in view of the large number of questions raised by that Regulation.

Oral procedure

The Commission of the European Communities, represented by J. Sack, presented oral argument and answered questions put to it by the Court at the sitting on 17 May 1984.

The Advocate General delivered his opinion at the sitting on 5 July 1984.

First set of questions (possibility of “components” being classified as scientific instruments or apparatus)

These questions are directed to a distinction between the phrase “scientific instruments and apparatus” and the phrase “components, spare parts or accessories”. More particularly, the Finanzgericht wishes to ascertain whether such components may at the same time be classified as scientific instruments or apparatus and as such, qualify for duty-free admission independently of the unit for which they are intended. If so, the Finanzgericht asks what are the characteristics on the basis of which those components may be held to have the function of a scientific instrument or apparatus.

As the Commission has rightly pointed out, components, spare parts and accessories are admitted free of duty if it is established that they are required for the operation of a scientific instrument or apparatus, without there being any need to establish that the components, spare parts and accessories themselves are of a scientific character. That classification therefore depends not on the nature of those components but on their connection with a scientific instrument or apparatus.

There is nothing in the scheme of the regulation to prevent such a component from also being classified in its own right as a scientific instrument or apparatus within the meaning of Article 3 (1) of Regulation No 1798/75. In those circumstances, however, the component in question is admitted free of duty only if it satisfies all the requirements laid down by the Regulation for the duty-free admission of scientific instruments and apparatus. The classification of such a component therefore depends on the question whether, apart from the connection which it may have with another scientific unit of equipment, it is also capable of performing an independent scientific function and whether it satisfies in addition all the requirements of Article 3 (1) of the Regulation, particularly inasmuch as it must be particularly suitable for pure scientific research, as the Court emphasized in its judgment of 2 February 1978 in Case 72/77 Universiteitskliniek Utrecht [1978] ECR 189.

The answer to the first set of questions must therefore be that paragraphs 1 and 2 of Article 3 of Regulation No 1798/75, considered in conjunction with one another, must be interpreted as meaning that the fact that materials can be regarded as components, spare parts or accessories of an installation or a complex unit of equipment for scientific research does not prevent them from being classified as scientific instruments or apparatus, if it is established that they are capable of performing an independent scientific function and if all the requirements of Article 3 (1) of the Regulation are satisfied.

It is for the national court to make that determination in the light of all the relevant facts of the case.

Second set of questions (customs treatment of components intended for scientific installations constructed within the Community)

If the materials in question cannot be classified as scientific instruments or apparatus within the meaning of the Regulation, the Finanzgericht seeks guidance on the question whether the duty-free admission provided for components, spare parts and accessories may also be granted where such materials are imported for incorporation in a scientific installation constructed within the Community or whether such duty-free admission is restricted to components intended for scientific instruments or apparatus which have themselves been imported. The answer to that question depends on the interpretation of the phrase ‘scientific instruments and apparatus which qualify for duty-free admission’ in Article 3 (2) of Regulation No 1798/75.

In that regard, the arguments put forward by the Commission which are based on the Nairobi Protocol and on the subsequent amendments to the relevant legislation cannot be accepted. The customs treatment for the materials in question is determined by the legislation in force at the time of importation. That legislation cannot be altered by the provisions of subsequent conventions or legislation. Moreover, it should be observed that even the Nairobi Protocol and the legislation based thereon do not entirely dispel the doubts surrounding the question whether duty-free admission may be granted in respect of components intended for installations which, if they were imported, would qualify for duty-free admission.

As regards the conclusions to be drawn from the manner in which the other contracting parties are likely to interpret the provisions of existing conventions, it is sufficient to recall what the Court stated in its jugdment of 26 October 1982 regarding the need to ensure that international agreements were interpreted objectively, regardless of considerations relating to reciprocity in the implementation of such agreements by other parties (Case 104/81 Hauptzollamt Mainz v Kupferberg [1982] ECR 3641, paragraph 18 of the decision). Moreover, it must be observed in that connection that the Commission has not submitted any information whatsoever on the manner in which the provision in question has actually been applied and interpreted by the other contracting parties to the Florence and Nairobi Agreements. Its observations seem to be based not on established facts but on assumptions regarding the intentions of the other contracting parties. The Commission's reasoning must therefore be rejected in its entirety.

However, it is possible in the circumstances to derive certain indications which may be useful for the interpretation of the contested provision from the scheme of Regulation No 1798/75 and from certain considerations connected with the customs control procedure.

In the first place, it is appropriate to draw attention to Article 2 of Regulation No 1798/75 which provides that educational, scientific and cultural materials may be admitted free of duty only when they are intended for certain research or teaching establishments. The application of that provision raises certain difficulties where the imported components are intended not directly for the scientific or educational institution concerned but for the manufacture of scientific equipment which is to be delivered subsequently to the institution concerned. Secondly, it is appropriate to point out that a scientific installation constructed in the Community falls outside the scope of customs law and may not therefore legally be classified as a scientific instrument or apparatus within the meaning of Regulation No 1798/75, particularly since duty-free admission may be granted only if it is established that instruments or apparatus of equivalent value are not being manufactured in the Community. It would appear therefore that the argument relied upon by the University of Hamburg amounts to classifying the principal installation as a scientific instrument or apparatus which qualifies for duty-free admission, not in its own right, since it is built in the Community, but exclusively by virtue of its connection with the imported components, spare parts or accessories. Regulation No 1798/75 does not provide any basis for such an interpretation which is a pure fiction and contrary to the system established by that Regulation.

For all those reasons, it would appear that certain considerations relating to the scope and the scheme of Regulation No 1798/75 preclude the duty-free admission of components intended for incorporation in a scientific installation constructed in the Community.

The industrial and commercial policy considerations referred to by the Finanzgericht in its order for reference do not stand in the way of a conclusion of that kind. As the Commission has pointed out, where it appears that Community industry is capable of constructing a scientific unit of equipment in its entirety, except for certain specific parts, the duty-free admission of high-value components may, far from promoting technological progress in the Community, instead constitute an incentive to keep outside the Community certain scientifically and technically important production facilities. In those circumstances, the refusal to admit the components in question free of duty may therefore act as a useful incentive to secure the transfer of such production to the Community.

For those reasons, the answer to the second set of questions submitted by the Finanzgericht must be that the phrase ‘scientific instruments and apparatus which qualify for duty-free admission’ in Article 3 (2) of Regulation No 1798/75 must be interpreted as meaning that components, spare parts and accessories may be imported free of duty provided that they are intended for scientific instruments or apparatus which are, or have been, admitted free of duty. Duty-free admission may not, however, be granted where the components are intended to be incorporated in a scientific installation constructed in the Community.

Costs

The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.