1 BY AN ORDER DATED 29 JANUARY 1985 , WHICH WAS RECEIVED AT THE COURT ON 27 FEBRUARY 1985 , THE BUNDESFINANZHOF ( FEDERAL FINANCE COURT ) REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE INTERPRETATION AND VALIDITY OF COUNCIL REGULATION ( EEC ) NO 1162/79 OF 12 JUNE 1979 ( OFFICIAL JOURNAL L 147 , P . 1 ), AND NO 1481/80 OF 9 JUNE 1980 ( OFFICIAL JOURNAL L 148 , P . 1 ), TEMPORARILY SUSPENDING THE AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES ON CERTAIN INDUSTRIAL PRODUCTS , WITH REGARD TO ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' EX SUBHEADING 51.01 A OF THE COMMON CUSTOMS TARIFF .
2 THE QUESTIONS WERE RAISED IN PROCEEDINGS BETWEEN ETHICON GMBH AND THE GERMAN CUSTOMS ADMINISTRATION AND CONCERN DUTIES CHARGED BETWEEN JANUARY AND SEPTEMBER 1980 ON IMPORTS FROM NON-MEMBER COUNTRIES OF YARN FOR THE MANUFACTURE OF STERILE BRAID AND SURGICAL SUTURES .
3 THE UNSTERILE YARN IMPORTED BY ETHICON FOR ITS PRODUCTION NEEDS IN THE FEDERAL REPUBLIC OF GERMANY CONSISTS OF A SUBSTANCE CALLED ' POLYGLACTIN 910 ' WHICH IS 90% POLYGLYCOLLIC ACID AND 10% LACTID ( LACTIC ACID ). ETHICON SEEKS TO HAVE THE TEMPORARY SUSPENSION OF AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES ON ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' PROVIDED FOR IN THE ABOVE-MENTIONED REGULATIONS EXTENDED TO THE YARN WHICH IT IMPORTS .
4 ACCORDING TO THE DOCUMENTS BEFORE THE COURT , PROVISION WAS FIRST MADE ON THE BASIS OF ARTICLE 28 OF THE EEC TREATY FOR THE AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES ON YARN ENTIRELY OF POLYGLYCOLLIC ACID , WHICH IS NOT PRODUCED IN THE COMMUNITY , TO BE TEMPORARILY SUSPENDED IN COUNCIL REGULATION NO 2990/74 OF 26 NOVEMBER 1974 ( OFFICIAL JOURNAL L 319 , P . 6 ). THAT REGULATION WAS ADOPTED ON THE INITIATIVE OF A GROUP OF COMPANIES COMPETING WITH ETHICON WHICH AT THAT TIME WAS THE ONLY MANUFACTURER IN THE COMMUNITY OF STERILE YARN FOR MAKING SUCH SURGICAL SUTURES . THAT SUSPENSION OF AUTONOMOUS COMMON CUSTOMS DUTIES WAS EXTENDED EVERY YEAR , FOR THE PERIOD FROM 1 JULY 1979 TO 30 JUNE 1980 BY REGULATION NO 1162/79 AND FOR THE PERIOD FROM 1 JULY 1980 TO 30 JUNE 1981 BY REGULATION NO 1481/80 .
5 ETHICON BEGAN MANUFACTURING STERILE YARN IN THE COMMUNITY IN 1979 . FOR REASONS CONNECTED WITH A DISPUTE ABOUT THE SCOPE OF PROTECTION OF A PATENT , ETHICON USES YARN WHICH CONTAINS A QUANTITY OF LACTID BESIDES POLYGLYCOLLIC ACID . IT ALSO IMPORTS THE YARN FROM NON-MEMBER COUNTRIES BECAUSE IT IS NOT MANUFACTURED IN THE COMMUNITY . ACCORDING TO ETHICON , THE ADDITION OF 10% OF LACTID HAS NO EFFECT ON THE MANUFACTURING PROCESS OR ON THE PROPERTIES AND APPLICATION OF THE PRODUCTS ON THE BASIS OF WHICH SUCH YARN COULD BE DISTINGUISHED FROM YARN CONSISTING ENTIRELY OF POLYGLYCOLLIC ACID . IN ACCORDANCE WITH THE INFORMATION WHICH THE GERMAN CUSTOMS ADMINISTRATION HAD GIVEN TO ETHICON AT ITS REQUEST IN 1978 , AN AUTONOMOUS DUTY OF 9% WAS CHARGED ON ALL OF ETHICON ' S IMPORTS OF SUCH YARN AS PROVIDED FOR IN HEADING 51.01 A OF THE COMMON CUSTOMS TARIFF .
6 WHEN ETHICON DISCOVERED THAT AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES HAD BEEN SUSPENDED ON ITS COMPETITOR ' S IMPORTS OF UNSTERILE YARN , IT APPROACHED THE FEDERAL MINISTRY FOR ECONOMIC AFFAIRS IN 1980 IN ORDER TO HAVE THE WORDING OF THE SUSPENDED TARIFF HEADING IN QUESTION AMENDED . IN RESPONSE TO THAT INITIATIVE , THE COUNCIL , BY REGULATION NO 2916/80 OF 11 NOVEMBER 1980 ( OFFICIAL JOURNAL L 304 , P . 1 ), SUSPENDED AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES ON ' YARN CONTAINING NOT LESS THAN 88% POLYGLYCOLLIC ACID ' CLASSIFIED UNDER TARIFF HEADING 51.01 A FROM 13 NOVEMBER 1980 TO 30 JUNE 1981 . BESIDES MENTIONING ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' COUNCIL REGULATION ( EEC ) NO 1533/81 OF 19 MAY 1981 ( OFFICIAL JOURNAL L 155 , P . 1 ), TEMPORARILY SUSPENDING THE AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES ON CERTAIN INDUSTRIAL PRODUCTS AS FROM 1 JULY 1981 , ALSO MENTIONS ' YARN OF A COPOLYMER OF GLYCOLLIC ACID AND LACTIC ACID ... FOR THE MANUFACTURE OF SURGICAL SUTURES ' ; A FOOTNOTE TO THE LATTER HEADING STATES THAT ' CONTROL OF THE USE FOR THIS SPECIAL PURPOSE SHALL BE CARRIED OUT PURSUANT TO THE RELEVANT COMMUNITY PROVISIONS ' .
7 SINCE THE DECISIONS TO CHARGE CUSTOMS DUTIES ON ETHICON ' S IMPORTS WERE STILL NOT FINAL WHEN IT LEARNT OF THE SUSPENSION OF DUTIES GRANTED TO ITS COMPETITOR , IT ALSO BROUGHT AN ACTION BEFORE THE FINANZGERICHT ( FINANCE COURT ) HAMBURG FOR THEIR ANNULMENT . THE FINANZGERICHT REJECTED ITS ACTION AS UNFOUNDED ON THE GROUNDS THAT REGULATIONS NOS 2916/80 AND 1533/81 WERE NOT RETROACTIVE AND THAT REGULATIONS NOS 1162/79 AND 1481/80 , APPLICABLE AT THE TIME OF THE IMPORTS IN QUESTION , DID NOT COVER THE YARN IMPORTED BY ETHICON .
8 ON APPEAL IN CASSATION AGAINST THAT JUDGMENT THE BUNDESFINANZHOF RAISED THE QUESTION WHETHER THE FACT THAT A COMPETITOR OF ETHICON BENEFITED FROM A SUSPENSION OF CUSTOMS DUTIES ON SIMILAR PRODUCTS WAS CONTRARY TO THE PROHIBITION OF DISCRIMINATION AND WHETHER IN THAT CASE IT WAS PERMISSIBLE UNDER THE SECOND PARAGRAPH OF ARTICLE 174 AND THE FIRST PARAGRAPH OF ARTICLE 176 OF THE EEC TREATY TO EXTEND THE DISCRIMINATORY SUSPENSION OF DUTIES TO PRODUCTS NOT EXPRESSLY COVERED BY IT . THE BUNDESFINANZHOF THEREFORE SUBMITTED THE FOLLOWING QUESTIONS TO THE COURT FOR A PRELIMINARY RULING :
' ( 1 ) MUST THE SUSPENSION OF CUSTOMS DUTIES ON ' ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' EX SUBHEADING 51.01 A OF THE COMMON CUSTOMS TARIFF PROVIDED FOR IN COUNCIL REGULATION NO 1162/79 AND NO 1481/80 BE INTERPRETED - CONTRARY TO THE WORDING BUT TAKING ACCOUNT OF THE PURPOSE AS EXPRESSED INTER ALIA IN SUBSEQUENT MEASURES SUSPENDING CUSTOMS DUTIES - AS COVERING YARN FOR THE MANUFACTURE OF SURGICAL SUTURES CONSISTING AS TO 90% OF POLYGLYCOLLIC ACID AND AS TO 10% OF LACTID ( LACTIC ACID ), THE ADDITION OF WHICH HAS NO EFFECT ON ITS PROPERTIES OR USE?
( 2)IF QUESTION 1 MUST BE ANSWERED IN THE NEGATIVE :
IS THE SUSPENSION OF CUSTOMS DUTIES REFERRED TO IN QUESTION 1 INVALID FOR INFRINGING THE PROHIBITION OF DISCRIMINATION LAID DOWN IN COMMUNITY LAW ON THE GROUND THAT IT APPLIES SOLELY TO ' ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' ' BUT NOT TO YARN CONSISTING AS TO 90% OF POLYGLYCOLLIC ACID AND AS TO 10% OF LACTID HAVING THE SAME PROPERTIES AND APPLICATION AS YARN CONSISTING AS TO 100% OF POLYGLYCOLLIC ACID WHICH IS IMPORTED AND PROCESSED BY A COMPETITOR OF THE IMPORTING AND PROCESSING UNDERTAKING?
( 3)IF QUESTION 2 MUST BE ANSWERED IN THE AFFIRMATIVE :
WHAT CONSEQUENCES ENSUE FROM THE INVALIDITY OF THE SUSPENSION OF CUSTOMS DUTIES REFERRED TO IN QUESTION 1?
'
THE FIRST QUESTION
9 ETHICON TAKES THE VIEW THAT , AS THE SUBSEQUENT AMENDMENTS OF THE RELEVANT REGULATIONS HAVE CONFIRMED , THE AIM OF REGULATIONS NOS 1162/79 AND 1481/80 , WHICH IS TO MEET A NEED EXISTING IN THE COMMUNITY , REQUIRES THE DESCRIPTION IN QUESTION TO BE INTERPRETED AS MEANING THAT PRODUCTS CONTAINING 10% OF LACTID WHICH HAS NO EFFECT ON THE PROPERTIES AND USE OF THE PRODUCT ARE ALSO COVERED BY THE WORDS ' WHOLLY OF POLYGLYCOLLIC ACID ' .
10 IN THE VIEW OF THE COUNCIL AND THE COMMISSION , SUCH EXCEPTIONS TO THE COMMON CUSTOMS TARIFF MUST BE INTERPRETED STRICTLY . TO INTERPRET THOSE PROVISIONS CONTRARY TO THEIR CLEAR WORDING IN THE LIGHT OF A SUBSEQUENT AMENDMENT OF THE REGULATIONS IS CONTRARY TO THE REQUIREMENTS OF LEGAL CERTAINTY .
11 IN THIS REGARD THE COURT WOULD OBSERVE FIRST OF ALL THAT THE DESCRIPTION IN QUESTION IN THE ANNEXES TO REGULATIONS NOS 1162/79 AND 1481/80 DOES NOT MENTION EITHER THE PROPERTIES OR USE OF THE PRODUCT AND DOES NOT COVER YARN WHICH , BECAUSE IT CONTAINS 10% OF LACTID , IS NOT WHOLLY OF POLYGLYCOLLIC ACID .
12 AS IS CLEAR FROM THE PREAMBLES TO THE RELEVANT COUNCIL REGULATIONS , THE AIM OF SUSPENDING THE AUTONOMOUS COMMON CUSTOMS TARIFF DUTIES PURSUANT TO ARTICLE 28 OF THE EEC TREATY IS TEMPORARILY TO MEET THE NEEDS OF THE USER INDUSTRIES OF THE COMMUNITY . IN ADOPTING SUCH PROVISIONS THE COUNCIL MUST TAKE ACCOUNT NOT ONLY OF THOSE NEEDS BUT ALSO OF THE REQUIREMENTS OF LEGAL CERTAINTY AND OF THE DIFFICULTIES CONFRONTING NATIONAL CUSTOMS ADMINISTRATIONS OWING TO THE WIDE RANGE AND COMPLEXITY OF THE TASKS WHICH THEY MUST CARRY OUT .
13 IT FOLLOWS THAT THE DESCRIPTIONS OF GOODS ON WHICH CUSTOMS DUTIES HAVE BEEN SUSPENDED MUST BE INTERPRETED ACCORDING TO OBJECTIVE CRITERIA DERIVED FROM THEIR WORDING AND THAT THEY MAY NOT BE APPLIED CONTRARY TO THEIR WORDING TO OTHER GOODS EVEN IF THEIR PROPERTIES AND APPLICATION ARE NO DIFFERENT FROM THOSE COVERED BY THE SUSPENSION . IN PARTICULAR , A LATER AMENDMENT OF THE DESCRIPTION OF A PRODUCT ON WHICH DUTIES HAVE BEEN SUSPENDED CANNOT RETROACTIVELY AFFECT THE INTERPRETATION OF THE DESCRIPTION PREVIOUSLY APPLIED FOR THAT PURPOSE .
14 IT MUST ALSO BE OBSERVED THAT REGULATIONS NOS 2916/80 AND 1533/81 DID NOT AMEND THE DESCRIPTION ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' BUT ADDED ANOTHER DESCRIPTION TO THE LIST OF PRODUCTS COVERED BY THE SUSPENSION . THE ADOPTION OF THAT METHOD OF EXTENDING THE SUSPENSION OF CUSTOMS DUTIES TO THE YARN CONCERNED IN THE MAIN ACTION AGAIN CONFIRMS THAT THE DESCRIPTION IN QUESTION COULD NOT BE INTERPRETED AS COVERING YARN SUCH AS THAT IMPORTED BY ETHICON .
15 THE ANSWER TO THE FIRST QUESTION MUST THEREFORE BE THAT THE DESCRIPTION ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' EX SUBHEADING 51.01 A OF THE COMMON CUSTOMS TARIFF CONTAINED IN COUNCIL REGULATION NO 1162/79 OF 12 JUNE 1979 AND NO 1481/80 OF 9 JUNE 1980 DOES NOT COVER YARN COMPOSED OF BOTH POLYGLYCOLLIC ACID , AND LACTIC ACID , EVEN IF THE 10% OF LACTIC ACID WHICH IT CONTAINS DOES NOT AFFECT THE PROPERTIES OR USE OF THAT PRODUCT .
THE SECOND QUESTION
16 ETHICON CONTENDS THAT THE REGULATIONS IN QUESTION ARE INVALID AS REGARDS THE SUSPENSION OF CUSTOMS DUTIES ON THE GOODS FITTING THE DESCRIPTION IN QUESTION IF THAT DESCRIPTION MUST BE INTERPRETED NARROWLY , FOR THE USER INDUSTRY OF THE COMMUNITY HAS AN EQUAL NEED FOR BOTH TYPES OF YARN . THE FACT THAT THE SUSPENSION OF CUSTOMS DUTY IS RESTRICTED TO ONE KIND OF YARN , ALTHOUGH BOTH KINDS ARE EQUIVALENT IN EVERY RESPECT , IS ARBITRARY AND CONTRARY TO THE PROHIBITION OF DISCRIMINATION .
17 THE COUNCIL AND THE COMMISSION DENY THAT THERE IS ANY DISCRIMINATION AND POINT OUT THAT THE PRODUCT CONCERNED IS OBJECTIVELY DESCRIBED IN THE REGULATIONS IN QUESTION AND THAT THEY APPLY TO EVERY IMPORTER . THE REASON WHY THERE IS NO HEADING COVERING THE YARN IMPORTED BY ETHICON IN THOSE REGULATIONS IS THAT THE COUNCIL WAS NOT ADVISED EARLIER THAT THE COMMUNITY ' S USER INDUSTRY HAD A NEED FOR SUCH YARN .
18 IT MUST BE OBSERVED IN THIS REGARD THAT , AS THE COURT HAS ALREADY STATED IN ITS JUDGMENT OF 14 NOVEMBER 1985 IN CASE 227/84 TEXAS INSTRUMENTS DEUTSCHLAND GMBH V HAUPTZOLLAMT MUNCHEN-MITTE ( 1985 ) ECR 3639 , ARTICLE 28 OF THE EEC TREATY LEAVES THE COUNCIL A WIDE DISCRETION IN THIS MATTER . IN A CASE SUCH AS THIS , IT IS NECESSARY TO CONSIDER WHETHER , IN VIEW OF THE PROCEDURE FOLLOWED AND THE AIM OF THE MEASURE ADOPTED , THE DESCRIPTION IN QUESTION IS ARBITRARY OR CONSTITUTES A MISUSE OF POWER DESIGNED TO PLACE CERTAIN UNDERTAKINGS AT A DISADVANTAGE .
19 IN ACCORDANCE WITH THE PURPOSE OF THE PROVISIONS FOR SUSPENDING CUSTOMS DUTIES AND IN VIEW OF THE ABOVE-MENTIONED REQUIREMENTS , WHICH THE COUNCIL MUST TAKE INTO ACCOUNT IN CUSTOMS MATTERS BY VIRTUE OF ARTICLE 28 OF THE EEC TREATY , THE COUNCIL MUST , IN ORDER TO DELIMIT THE SUSPENSION OF CUSTOMS DUTIES , SELECT OBJECTIVE AND VERIFIABLE CRITERIA STRICTLY LIMITING THE SCOPE OF THE EXEMPTION IN QUESTION TO THE PRODUCTS FOR WHICH THE USER INDUSTRIES OF THE COMMUNITY HAVE CLEARLY DEVELOPED A NEED WHICH THE COUNCIL HAS ACTUALLY BEEN ABLE TO ESTABLISH . WHERE NECESSARY , IT IS FOR THE IMPORTER SEEKING AN EXEMPTION FOR CERTAIN GOODS TO SUBMIT HIS APPLICATION TO THE COMPETENT AUTHORITIES SO THAT THE COUNCIL MAY MAKE A DECISION ON THE MATTER .
20 BY BASING ITS DECISION ON THE CHEMICAL COMPOSITION OF THE ONLY PRODUCT FOR WHICH , AT THE TIME WHEN THE DECISION TO SUSPEND CUSTOMS DUTIES WAS TAKEN , AN IMPORT NEED EXISTED AND THE COUNCIL HAD BEEN ADVISED OF THAT NEED , THE COUNCIL CHOSE AN OBJECTIVE AND VERIFIABLE CRITERION WHICH IS NOT IN ITSELF DISCRIMINATORY EVEN IF A SIMILAR PRODUCT , HAVING THE SAME PROPERTIES AND INTENDED FOR THE SAME APPLICATION , EXISTED , BUT FOR WHICH NO IMPORT NEED HAD YET APPEARED . AS IS CLEAR FROM THE DOCUMENTS BEFORE THE COURT , THE COUNCIL DECIDED WITHOUT DELAY TO SUSPEND CUSTOMS DUTIES ON THE SIMILAR PRODUCT USED BY ETHICON AS SOON AS IT WAS ADVISED OF A NEED TO IMPORT THAT PRODUCT . THEREFORE , THE DEFINITION CHOSEN BY THE COUNCIL HAD NEITHER THE PURPOSE NOR THE EFFECT OF PLACING AT A DISADVANTAGE UNDERTAKINGS WHICH HAD EXPRESSED SIMILAR NEEDS .
21 THERE IS NO EVIDENCE TO SUGGEST THAT IN CHOOSING OR MAINTAINING THAT CRITERION BASED ON THE CHEMICAL COMPOSITION OF YARN ' WHOLLY OF POLYGLYCOLLIC ACID ' THE COUNCIL COMMITTED A MISUSE OF POWER OR MANIFESTLY MISJUDGED THE ECONOMIC SITUATION .
22 THE ANSWER TO THE SECOND QUESTION MUST THEREFORE BE THAT CONSIDERATION OF THE QUESTIONS RAISED HAS DISCLOSED NO FACTOR OF SUCH A NATURE AS TO AFFECT THE VALIDITY OF REGULATIONS NOS 1162/79 AND 1481/80 AS REGARDS THE SUSPENSION OF DUTIES IN QUESTION .
23 THE THIRD QUESTION , WHICH WAS RAISED IN CASE THE SECOND QUESTION WAS ANSWERED IN THE AFFIRMATIVE , IS THEREFORE IRRELEVANT .
COSTS
24 THE COSTS INCURRED BY THE COUNCIL AND BY THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . SINCE THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS 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 .
ON THOSE GROUNDS ,
THE COURT ( THIRD CHAMBER ),
IN ANSWER TO THE QUESTIONS SUBMITTED TO IT BY THE BUNDESFINANZHOF BY ORDER OF 24 JANUARY 1985 , HEREBY RULES :
( 1 ) THE DESCRIPTION ' YARN WHOLLY OF POLYGLYCOLLIC ACID ' EX SUBHEADING 51.01 A OF THE COMMON CUSTOMS TARIFF CONTAINED IN COUNCIL REGULATION NO 1162/79 OF 12 JUNE 1979 AND NO 1481/80 OF 9 JUNE 1980 DOES NOT COVER YARN COMPOSED OF BOTH POLYGLYCOLLIC ACID AND LACTIC ACID , EVEN IF THE 10% OF LACTIC ACID WHICH IT CONTAINS DOES NOT AFFECT THE PROPERTIES OR USE OF THAT PRODUCT .
( 2)CONSIDERATION OF THE QUESTIONS RAISED HAS DISCLOSED NO FACTOR OF SUCH A NATURE AS TO AFFECT THE VALIDITY OF REGULATIONS NOS 1162/79 AND 1481/80 AS REGARDS THE SUSPENSION OF DUTIES IN QUESTION .
