61978J0114

1 . GOODS - SLIDE FASTENERS - ORIGIN - DETERMINATION THEREOF - CRITERIA - COMMISSION REGULATION ( EEC ) NO 2067/77 , ART . 1 - INVALID

IN ADOPTING REGULATION ( EEC ) NO 2067/77 CONCERNING THE DETERMINATION OF THE ORIGIN OF SLIDE FASTENERS , THE COMMISSION EXCEEDED ITS POWER UNDER REGULATION ( EEC ) NO 802/68 OF THE COUNCIL . ARTICLE 1 OF REGULATION NO 2067/77 IS THEREFORE INVALID .

IN CASE 114/78

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE VERWALTUNGSGERICHT KASSEL FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

YOSHIDA GMBH , MAINHAUSEN ( FEDERAL REPUBLIC OF GERMANY )

AND

INDUSTRIE- UND HANDELSKAMMER KASSEL

ON THE VALIDITY OF COMMISSION REGULATION ( EEC ) NO 2067/77 CONCERNING THE DETERMINATION OF THE ORIGIN OF SLIDE FASTENERS ( OFFICIAL JOURNAL L 242 OF 21 SEPTEMBER 1977 , P . 5 ),

1BY ORDER OF 27 APRIL 1978 RECEIVED AT THE COURT REGISTRY ON 11 MAY 1978 THE VERWALTUNGSGERICHT KASSEL REFERRED TO THE COURT OF JUSTICE UNDER ARTICLE 177 OF THE EEC TREATY THE QUESTION OF THE VALIDITY OF COMMISSION REGULATION ( EEC ) NO 2067/77 OF 20 SEPTEMBER 1977 CONCERNING THE DETERMINATION OF THE ORIGIN OF SLIDE FASTENERS ( OFFICIAL JOURNAL L 242 OF 21 SEPTEMBER 1977 , P . 5 ).

2THIS QUESTION HAS BEEN RAISED WITHIN THE CONTEXT OF A DISPUTE BETWEEN A GERMAN SUBSIDIARY OF THE JAPANESE YOSHIDA KOGYO K.K . GROUP , WHICH OWNS A FACTORY IN WENKBACH-MARBURG IN WHICH IT MANUFACTURES SLIDE FASTENERS BY ASSEMBLING PRODUCTS FROM MATERIALS IMPORTED PARTLY FROM JAPAN AND PARTS WHICH ARE PARTIALLY MANUFACTURED IN JAPAN , SUCH AS THE SLIDERS , AND THE INDUSTRIE- UND HANDELSKAMMER KASSEL WHICH REFUSED , IN APPLICATION OF REGULATION NO 2067/77 , TO GRANT IT A CERTIFICATE OF ORIGIN CERTIFYING THAT THE SLIDE FASTENERS ARE OF GERMAN OR COMMUNITY ORIGIN ON THE GROUND THAT THE SLIDERS USED IN THE MANUFACTURE OF THE SLIDE FASTENERS HAD NOT BEEN MANUFACTURED IN THE TERRITORY OF THE FEDERAL REPUBLIC OF GERMANY .

3UNTIL THE ENTRY INTO FORCE OF THAT REGULATION THESE CERTIFICATES OF ORIGIN , WHICH ARE NECESSARY FOR THE PLAINTIFF FOR THE PURPOSE OF OBTAINING THE BENEFIT OF CERTAIN ADVANTAGES RESERVED TO COMMUNITY PRODUCTS WHERE THEY ARE EXPORTED TO THIRD COUNTRIES , WERE GRANTED WITHOUT DIFFICULTY BY THE DEFENDANT UNDER ARTICLE 5 OF REGULATION ( EEC ) NO 802/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE COMMON DEFINITION OF THE CONCEPT OF THE ORIGIN OF GOODS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 165 ). IN THESE CIRCUMSTANCES THE NATIONAL COURT REFERRED THE FOLLOWING QUESTION TO THIS COURT :

' ' DOES COMMISSION REGULATION ( EEC ) NO 2067/77 CONFLICT WITH ARTICLE 5 OF REGULATION NO 802/68 AND ARTICLES 30 AND 110 OF THE EEC TREATY AND WITH OTHER PROVISIONS OR PRINCIPLES OF COMMUNITY LAW , IN PARTICULAR ESSENTIAL PROCEDURAL REQUIREMENTS , IN THAT IT REFUSES TO RECOGNIZE THAT THE PRODUCTION OF SLIDE FASTENERS BY THE PLAINTIFF DETERMINES THE ORIGIN OF THE GOODS IF SLIDERS ORIGINATING IN A THIRD COUNTRY ( IN THE PRESENT INSTANCE , JAPAN ) ARE USED?

' '

4THE FIRST PROBLEM TO BE SOLVED IS WHETHER THE COMMISSION HAS NOT , IN ADOPTING REGULATION NO 2067/77 , EXCEEDED THE POWERS CONFERRED UPON IT BY THE COUNCIL FOR THE IMPLEMENTATION OF THE RULES WHICH IT HAD LAID DOWN IN REGULATION NO 802/68 AND , MORE PRECISELY , WHETHER THE SPECIFIC CRITERIA OF ORIGIN LAID DOWN BY THE COMMISSION REGULATION CONFORM TO THE OBJECTIVE CRITERIA LAID DOWN IN ARTICLE 5 OF THE COUNCIL REGULATION WHICH IS THE LEGAL BASIS OF REGULATION NO 2067/77 AND THE SOURCE OF THE POWERS EXERCISED BY THE COMMISSION IN ADOPTING IT .

5UNDER ARTICLE 5 OF REGULATION NO 802/68 , ' ' A PRODUCT IN THE PRODUCTION OF WHICH TWO OR MORE COUNTRIES WERE CONCERNED SHALL BE REGARDED AS ORIGINATING IN THE COUNTRY IN WHICH THE LAST SUBSTANTIAL PROCESS OR OPERATION THAT IS ECONOMICALLY JUSTIFIED WAS PERFORMED , HAVING BEEN CARRIED OUT IN AN UNDERTAKING EQUIPPED FOR THE PURPOSE , AND RESULTING IN THE MANUFACTURE OF A NEW PRODUCT OR REPRESENTING AN IMPORTANT STAGE OF MANUFACTURE ' ' . IT IS CLEAR FROM THE FILE AND IN PARTICULAR FROM THE OBSERVATIONS OF THE DEFENDANT IN THE MAIN ACTION THAT THERE IS NO DOUBT THAT THE FINAL ASSEMBLY OF THE SLIDE FASTENERS CONSTITUTES AN ' ' OPERATION THAT IS ECONOMICALLY JUSTIFIED ' ' AND IS CARRIED OUT IN AN UNDERTAKING WHICH IS ' ' REMARKABLY WELL-EQUIPPED AND WHICH HAS MODERN MACHINES AND A LARGE STAFF ' ' . THUS THE PROBLEM IS ESSENTIALLY WHETHER THE PROVISIONS OF REGULATION NO 2067/77 CONFERRING ON GOODS THE STATUS OF PRODUCTS ORGINATING IN THE COUNTRY IN WHICH ASSEMBLY TOOK PLACE INCLUDING PLACING OF THE SCOOPS OR OTHER INTERLOCKING ELEMENTS ONTO THE TAPES ACCOMPANIED BY THE MANUFACTURE OF THE SLIDER AND THE FORMING OF THE SCOOPS OR OTHER INTERLOCKING ELEMENTS DO NOT EXCEED THE LIMITS OF THE DISCRETION OF THE COMMISSION TO ADOPT IMPLEMENTING PROVISIONS IN THIS FIELD UNDER ARTICLE 14 OF REGULATION NO 802/68 .

6TO REPLY TO THIS QUESTION IT IS NECESSARY TO INQUIRE AS TO THE CIRCUMSTANCES IN WHICH REGULATION NO 2067/77 CAME INTO BEING AND WAS THEN DRAWN UP AND FINALLY TO INTERPRET IT HAVING REGARD TO THE TECHNICAL OPERATIONS RESULTING IN THE MANUFACTURE OF SLIDE FASTENERS .

7IN 1975 THE COMMISSION FOUND THAT IMPORTS INTO THE COMMUNITY OF SLIDE FASTENERS , PARTICULARLY OF JAPANESE ORIGIN , HAD INCREASED CONSIDERABLY IN RECENT YEARS AND THAT THOSE DEVELOPMENTS THREATENED TO CAUSE INJURY TO COMMUNITY PRODUCERS OF LIKE PRODUCTS AND THEREFORE INTRODUCED ON 13 MARCH 1975 REGULATION NO 646/75 ESTABLISHING COMMUNITY SURVEILLANCE OVER IMPORTS OF SLIDE FASTENERS ( OFFICIAL JOURNAL L 67 OF 14 MARCH 1975 , P . 21 ). THIS REGULATION HAD BEEN PRECEDED BY THE INITIATION , IN ACCORDANCE WITH THE PROVISIONS OF REGULATION NO 459/68 OF THE COUNCIL OF 5 APRIL 1968 ON PROTECTION AGAINST DUMPING OR THE GRANTING OF BOUNTIES OR SUBSIDIES BY COUNTRIES WHICH ARE NOT MEMBERS OF THE EUROPEAN ECONOMIC COMMUNITY , OF AN ANTI-DUMPING/ANTI-SUBSIDIES PROCEDURE CONCERNING ZIP FASTENERS EXPORTED BY YOSHIDA KOGYO , TOKYO , ( JAPAN ) ( OFFICIAL JOURNAL C 51 OF 30 JUNE 1973 , P . 2 ). THIS PROCEDURE WAS TERMINATED ' ' HAVING REGARD TO THE DEVELOPMENT OF THE SITUATION ' ' BY A NOTICE PUBLISHED IN OFFICIAL JOURNAL C 63 OF 1 JUNE 1974 , P . 1 .

8IN ACCORDANCE WITH ARTICLE 14 OF REGULATION NO 802/68 , THE COMMISSION SUBMITTED TO THE COMMITTEE ON ORIGIN SET UP BY ARTICLE 12 OF REGULATION NO 802/68 AND CONSISTING OF REPRESENTATIVES OF THE MEMBER STATES WITH A REPRESENTATIVE OF THE COMMISSION ACTING AS CHAIRMAN , A DRAFT OF THE PROVISIONS TO BE ADOPTED WHICH DID NOT OBTAIN THE REQUIRED QUALIFIED MAJORITY . THE COMMISSION THEN APPLIED THE PROVISIONS OF ARTICLE 14 ( 3 ) ( B ) AND SUBMITTED TO THE COUNCIL A PROPOSAL WHICH RECEIVED NO REPLY . AT THE END OF THE PERIOD OF THREE MONTHS AFTER THE COUNCIL HAD BEEN INFORMED OF THE PROPOSAL IT HAD NOT ACTED ; THE COMMISSION THEREFORE , IN ACCORDANCE WITH ARTICLE 14 ( 3 ) ( C ), REGULARLY ADOPTED REGULATION NO 2067/77 , ARTICLE 1 OF WHICH STATES THAT SLIDE FASTENERS COMING WITHIN TARIFF HEADING 98.02 OF THE COMMON CUSTOMS TARIFF ORIGINATE IN THE COUNTRY IN WHICH THE FOLLOWING OPERATIONS TOOK PLACE : ' ' ASSEMBLY INCLUDING PLACING OF THE SCOOPS OR OTHER INTERLOCKING ELEMENTS ONTO THE TAPES ACCOMPANIED BY THE MANUFACTURE OF THE SLIDER AND THE FORMING OF THE SCOOPS OR OTHER INTERLOCKING ELEMENTS ' ' .

9IT IS NECESSARY THEREFORE TO EXAMINE WHETHER THOSE OPERATIONS CORRESPOND TO THE REQUIREMENTS LAID DOWN IN ARTICLE 5 OF REGULATION NO 802/68 AND MAY BE INTERPRETED AS CONSTITUTING THE LAST SUBSTANTIAL PROCESS OR OPERATION RESULTING IN THE MANUFACTURE OF THE SLIDE FASTENER OR REPRESENTING AN IMPORTANT STAGE OF MANUFACTURE . THIS IS A QUESTION OF A TECHNICAL NATURE WHICH MUST BE EXAMINED HAVING REGARD TO THE DEFINITION OF A SLIDE FASTENER AND TO THE VARIOUS OPERATIONS WHICH RESULT IN ITS FORMATION .

10THE CHARACTERISTIC FEATURE OF THE FINISHED PRODUCT KNOWN AS A SLIDE FASTENER IS THAT TWO FLEXIBLE TAPES TO WHICH SCOOPS OR OTHER INTERLOCKING ELEMENTS ARE ATTACHED IN PARALLEL STAGGERED FORMATION CAN BE OPENED OR CLOSED BY MEANS OF THE ACTION OF A SLIDER . IT FOLLOWS FROM THE FILE THAT THE PROCESS OF THE MANUFACTURE OF THE SLIDE FASTENERS WHICH TAKES PLACE AT THE UNDERTAKING IN WENKBACH-MARBURG IS COMPOSED OF THE FOLLOWING MAIN OPERATIONS :

( A ) THE WEAVING OF THE TAPES AND WHERE NECESSARY THE TRIMMING AND DYEING OF THEM ;

( B)THE STAMPING OF THE METAL SCOOPS OR THE PRODUCTION OF THE SPIRALS FROM NYLON THREAD ;

( C)THE ATTACHING OF THE METAL SCOOPS OR THE NYLON SPIRALS TO THE TAPES AND THE SUBSEQUENT JOINING OF THE TAPES ;

( D)THE ATTACHING OF BOTTOM STOPS AND TOP STOPS ;

( E)THE INSERTION AND WHERE NECESSARY THE COLOURING OF THE SLIDERS ;

( F)THE DRYING AND CLEANING OF THE SLIDE FASTENERS FOLLOWED BY THE CUTTING OF THEM TO MAKE INDIVIDUAL SLIDE FASTENERS .

11IT FOLLOWS FROM THE EXAMINATION OF THESE VARIOUS OPERATIONS THAT THE LAST SUBSTANTIAL PROCESS OR OPERATION MUST BE INTERPRETED AS BEING CONSTITUTED BY THE COMBINATION OF OPERATIONS ( C ), ( D ), ( E ) AND ( F ) RESULTING IN THE MANUFACTURE OF A NEW AND ORIGINAL PRODUCT WHICH , IN CONTRAST TO EACH OF THE BASIC PRODUCTS , IS A LINKING ELEMENT WHICH CAN BE SEPARATED OVER AND OVER AGAIN AND IS USED TO JOIN OBJECTS , IN PARTICULAR PIECES OF FABRIC . THE SLIDER CONSTITUTES ONLY A PARTICULAR PART OF THIS WHOLE , THE PRICE OF WHICH CANNOT MOREOVER HAVE AN APPRECIABLE INFLUENCE ON THE FINAL COST OF A SLIDE FASTENER AND WHICH , ALTHOUGH IT IS A CHARACTERISTIC FEATURE THEREOF , IS HOWEVER OF NO USE UNLESS IT IS COMBINED IN A HARMONIOUSLY ASSEMBLED WHOLE .

12THE COMMISSION , IN TAKING THE VIEW THAT IT HAD TO GO BACK BEYOND THE LAST PROCESS TO THE PROCESS OF THE MANUFACTURE OF THE SLIDER AND MAKE THAT A BINDING CONDITION FOR THE GRANT OF A CERTIFICATE OF ORIGIN , RELIED UPON AN OPERATION WHICH IS EXTRANEOUS TO THE OBJECTIVES OF REGULATION NO 802/68 WHICH REQUIRES A REAL AND OBJECTIVE DISTINCTION BETWEEN RAW MATERIAL AND PROCESSED PRODUCT DEPENDING FUNDAMENTALLY ON THE SPECIFIC MATERIAL QUALITIES OF EACH OF THOSE PRODUCTS . THE REQUIREMENT THAT VIRTUALLY ALL COMPONENTS OF A PRODUCT MUST BE OF COMMUNITY ORIGIN , EVEN THOSE OF LITTLE VALUE WHICH ARE OF NO USE IN THEMSELVES UNLESS THEY ARE INCORPORATED INTO A WHOLE , WOULD AMOUNT TO A REPUDIATION OF THE VERY OBJECTIVE OF THE RULES ON THE DETERMINATION OF ORIGIN . THE COMMISSION HAS THEREFORE BY THAT VERY FACT EXCEEDED ITS POWER UNDER ARTICLE 14 ( 3 ) OF REGULATION NO 802/68 .

13CONSEQUENTLY , WITHOUT ITS BEING NECESSARY TO EXAMINE WHETHER THE PROVISIONS OF REGULATION NO 2067/77 ARE COMPATIBLE WITH ARTICLES 30 AND 110 OF THE EEC TREATY AND WITH OTHER PROVISIONS AND PRINCIPLES OF COMMUNITY LAW OR ESSENTIAL PROCEDURAL REQUIREMENTS , IT IS NECESSARY TO STATE THAT ARTICLE 1 OF COMMISSION REGULATION NO 2067/77 OF 20 SEPTEMBER 1977 CONCERNING THE DETERMINATION OF THE ORIGIN OF SLIDE FASTENERS IS INVALID .

COSTS

14THE COSTS INCURRED BY THE COMMISSION AND BY THE GOVERNMENTS OF THE FEDERAL REPUBLIC OF GERMANY AND ITALY WHICH SUBMITTED OBSERVATIONS TO THE COURT ARE NOT RECOVERABLE AND SINCE THE PROCEEDINGS ARE , AS FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED , 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

IN ANSWER TO THE QUESTION REFERRED TO IT BY THE VERWALTUNGSGERICHT KASSEL BY ORDER OF 27 APRIL 1978 , HEREBY RULES :

ARTICLE 1 OF COMMISSION REGULATION NO 2067/77 OF 20 SEPTEMBER 1977 CONCERNING THE ORIGIN OF SLIDE FASTENERS ( OFFICIAL JOURNAL L 242 OF 21 SEPTEMBER 1977 , P . 5 ) IS INVALID .