–

the Teritorialna direktsia Mitnitsa Varna, by Y. Kulev,

–

the Bulgarian Government, by T. Mitova and L. Zaharieva, acting as Agents,

–

the European Commission, by D. Drambozova and M. Salyková, acting as Agents,

1

This request for a preliminary ruling concerns the interpretation of tariff subheadings 1511 and 1517 of the Combined Nomenclature (‘the CN’) 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 Implementing Regulation (EU) 2018/1602 of 11 October 2018 (OJ 2018 L 273, p. 1) and Commission Implementing Regulation (EU) 2019/1776 of 9 October 2019 (OJ 2019 L 280, p. 1).

2

The request has been made in proceedings between the Teritorialna direktsia Mitnitsa Varna (Varna Customs Directorate, Bulgaria; ‘the Customs Directorate’) and ‘NOVA TARGOVSKA KOMPANIA 2004’ AD (‘NTK 2004’) concerning a decision imposing a financial penalty on the latter for customs fraud on the ground that the tariff classification of the goods imported and declared by that company in April 2019 and September 2020 was incorrect.

3

The Harmonised Commodity Description and Coding System (‘the HS’) was established by the International Convention on the Harmonised Commodity Description and Coding System, concluded at Brussels on 14 June 1983, within the framework of the World Customs Organization (WCO), and approved, together with its amending Protocol of 24 June 1986, on behalf of the European Economic Community, by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1).

4

The Explanatory Notes to the HS are drawn up within the WCO in accordance with the provisions of that convention.

5

Under Article 3(1)(a) of that convention, each Contracting Party undertakes that its customs tariff and statistical nomenclatures will be in conformity with the HS, first, by using all the headings and the subheadings of the HS without addition or modification, together with their related numerical codes, second, by applying the ‘General Rules for the interpretation of the [HS]’ and all the section, chapter and subheading notes without modifying their scope, and, third, by following the numerical sequence of the HS.

6

Section III of the HS, entitled ‘Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes’ includes Chapter 15 thereof, with the same heading.

7

Heading 1511 of the HS, entitled ‘Palm oil and its fractions, whether or not refined, but not chemically modified’, includes the following subheadings:

‘151110 – Crude oil

151190 – Other’.

8

According to the Explanatory Note for that heading:

‘Palm oil is a vegetable fat obtained from the pulp of the fruits of oil palms. … The oils are obtained by extraction or pressing and may be of various colours depending on their condition and whether they have been refined. They are distinguishable from palm kernel oils (heading 15.13), which are obtained from the same oil palms by having a very high palmitic and oleic acid content.

Palm oil is used in the manufacture of soap, candles, cosmetic or toilet preparations, as a lubricant, for hot-dipped tin coating, in the production of palmitic acid, etc. Refined palm oil is used as a food stuff, e.g., as a frying fat, and in the manufacture of margarine.

…’

9

HS heading 1516 of the HS, entitled ‘Animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not refined, but not further prepared’, includes the following subheadings:

‘151610 – Animal fats and oils and their fractions

151620 – Vegetable fats and oils and their fractions’.

10

HS heading 1517, entitled ‘Margarine; edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516’, includes the following subheadings:

‘151710 – Margarine, excluding liquid margarine

151790 – Other’.

11

The Explanatory Note for heading 1517 of the HS is worded as follows:

‘This heading covers margarine and other edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this Chapter, other than those of heading 15.16. They are generally liquid or solid mixtures or preparations of:

…

The heading does not include single fats and oils simply refined, without further treatment; these remain classified in their respective headings even if they are put up for retail sale. …’

12

Under Article 57 of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (OJ 2013 L 269, p. 1), entitled ‘Tariff classification of goods’:

‘1.   For the application of the Common Customs Tariff, tariff classification of goods shall consist in the determination of one of the subheadings or further subdivisions of the [CN] under which those goods are to be classified.

2.   For the application of non-tariff measures, tariff classification of goods shall consist in the determination of one of the subheadings or further subdivisions of the [CN], or of any other nomenclature which is established by Union provisions and which is wholly or partly based on the [CN] or which provides for further subdivisions to it, under which those goods are to be classified.

3.   The subheading or further subdivision determined in accordance with paragraphs 1 and 2 shall be used for the purpose of applying the measures linked to that subheading.

4.   The Commission may adopt measures to determine the tariff classification of goods in accordance with paragraphs 1 and 2.’

13

As follows from Article 1(1) of Regulation No 2658/87, as amended by Council Regulation (EC) No 254/2000 of 31 January 2000 (OJ 2000 L 28, p. 16) (‘Regulation No 2658/87’), the CN, established by the Commission, governs the tariff classification of goods imported into the European Union. According to Article 3(1) of Regulation No 2658/87, the CN reproduces the HS six-digit headings and subheadings, with only the seventh and eighth digits creating further subheadings which are specific to it.

14

Pursuant to Article 12(1) of Regulation No 2658/87, the Commission is to adopt each year a regulation setting out the full version of the CN and of the rates of duty in accordance with that Article 1, as they result from measures adopted by the Council of the European Union or by the Commission. That regulation is to be published in the Official Journal of the European Union by 31 October at the latest and applies from 1 January of the following year.

15

Implementing Regulations 2018/1602 and 2019/1776 were adopted on the basis of that provision. Each of those implementing regulations amended the CN with effect from 1 January 2019 and 1 January 2020 respectively. The wording of the provisions of that nomenclature relevant to the main proceedings has, however, remained unchanged.

16

According to the general rules for the interpretation of the CN, which are set out in Annex I, Part One, Section I(A), in the versions resulting from each of those implementing regulations:

‘Classification of goods in the [CN] shall be governed by the following principles:

17

Part Two of that Annex I, entitled ‘Schedule of customs duties’, includes Section III, entitled ‘Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes’. That section includes Chapter 15, entitled ‘Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes’. Under Additional Note 1 to that chapter:

‘For the purposes of subheadings … 151110, …:

…’

18

Chapter 15 includes the following headings:

19

Article 234 of the zakon za mitnitsite (Law on Customs) (DV No 15 of 6 February1998), in the version applicable to the dispute in the main proceedings, provides:

‘(1)   Anyone who circumvents or attempts to circumvent:

(2)   The penalty for customs fraud shall be a fine for natural persons or a pecuniary penalty for legal entities or sole traders, equivalent to 100% to 200% of:

20

On 8 April 2019, eight containers exported by Louis Dreyfus Company Asia Pte. Ltd., to consignee NTK 2004, arrived from Türkiye at the port of Varna West (Bulgaria). According to the customs declaration, the goods contained therein were ‘palm fat MP 36-39 in CA 20 – 20-kg net in cartons’ under TARIC code 1511909900, for which the applicable rate of customs duty on imports is 9%.

21

On 28 September 2020, five containers having the same origin, the same exporter and the same consignee arrived at the same port terminal and were the subject of a customs declaration mentioning the same tariff subheading as that referred to in the preceding paragraph. The competent customs authorities carried out an inspection and took a sample of the goods in question, which was examined by the Tsentralna mitnicheska laboratoria (Central Customs Laboratory, Bulgaria) (‘the CCL’).

22

On 7 January 2021, the CCL issued a report stating that, according to its employee’s methodology, that sample was made up of ‘shortening of palm oil’, that is, a preparation consisting exclusively of palm oil or its fractions, not chemically modified and obtained by texturation, for use in various foodstuffs, such as doughs.

23

On the basis of those characteristics, the Customs Directorate decided that the goods at issue should be classified under subheading 15179099 and, consequently, subject to a customs duty rate of 16%, since they had undergone, in addition to refining, irreversible additional processing designed to alter the crystal structure by a texturation process specifically referred to in the Explanatory Notes to the HS to heading 1517.

24

That directorate also took the view that the results of the expert evaluations of the CCL were also valid for the goods declared on 8 April 2019, since those goods were identical to those declared on 28 September 2020. By decision of 20 May 2021, taken on the basis of Article 234 of the Law on Customs, in the version applicable in the main proceedings, the Customs Directorate imposed on NTK 2004 a financial penalty amounting to 17 895.95 Bulgarian leva (BGN) (approximately EUR 9153), representing 100% of the unpaid customs duties.

25

By judgment of 3 December 2021, the Rayonen sad Devnia (District Court, Devnia, Bulgaria), before which NTK 2004 brought an action, annulled the decision of 20 May 2021 on the ground that the customs fraud had not been proven. That court held, inter alia, that it had not been proven that the methodology used by the CCL had been officially validated and that that decision was based, incorrectly, on the Explanatory Notes to the HS, which refer to the texturation process, since those notes are not binding.

26

The Customs Directorate brought an appeal against that judgment before the referring court, which was called upon to rule at last instance.

27

That court states that the Bulgarian courts have reached different solutions as regards the tariff classification of ‘shortening of palm oil’. Some of them have upheld decisions by which the customs authorities reclassified those goods under heading 1517, whilst others have annulled similar reclassification decisions, in particular on the ground that the ‘texturation’ process is referred to only in the Explanatory Notes to the HS, which do not alter the scope of the CN.

28

According to NTK 2004, since the goods in question were processed by physical processes which did not alter their chemical composition, they accordingly come under heading 1511. According to the customs authorities, those goods are ‘textured’, that is to say, they have undergone further processing altering their crystalline structure and must therefore be classified under heading 1517.

29

The national court observes that the producer of the goods in question described them in the certificates which it issued in February 2019 as ‘textured palm fat’. NTK 2004 claims that the term ‘textured’ is used only to distinguish unambiguously refined and packaged palm oil, such as the goods at issue, from refined oil of the same specification, which is not packaged, but which is a raw material for the manufacture of special hydrogenated fats and margarines, and unrefined palm oil. All refined oils undergo certain stages of the texturation process, which forms an integral part of refining and packaging, without rendering the product ‘textured’ within the meaning of heading 1517. That position clearly refers to a subsequent chemical transformation in order to obtain certain additional structural characteristics. Thus, NTK 2004 submits that, even if the goods at issue did undergo further processing in order to modify their crystalline structure, such ‘texturation’ does not constitute chemical treatment.

30

The referring court states, however, that it is apparent from the CCL report that refined, bleached and deodorised palm oil undergoes further technological processing steps, which may include fractionation, that is to say, separation of the solid and liquid fractions of palm oil, their subsequent blending in varying proportions and a ‘final treatment for plasticisation (texturation) by crystallisation to modify the crystalline structure’. According to that report, there had been a ‘significant change in the consistency’ of the sample taken from the goods in question, which proved that those goods had undergone ‘a final transformation of their crystalline structure, known as “texturation”’.

31

NTK 2004 maintains that the CCL was not authorised to carry out analyses using the methodology which it used, a methodology the scientific merits of which have been challenged before the Bulgarian courts in other cases. The referring court notes that neither the CN, nor the Explanatory Notes to the CN nor the Explanatory Notes to the HS provides for standards, methods, criteria or indicators for analysing the consistency of palm oil, which makes it objectively impossible correctly to assess the objectivity and validity of the CCL’s conclusions.

32

It is in those circumstances that the Administrativen sad – Varna (Administrative Court, Varna, Bulgaria) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

33

As a preliminary point, it should be noted that, when the Court receives a reference for a preliminary ruling on tariff classification, its function is more to advise the referring court on the criteria which, if applied, will enable it to classify the products concerned correctly in the CN, rather than to carry out such classification itself. That classification results from a purely factual assessment which it is not for the Court to make in the context of a reference for a preliminary ruling (judgment of 9 March 2023, SOMEO, C‑725/21, EU:C:2023:194, paragraph 27 and the case-law cited).

34

Consequently, it is for the referring court to classify the goods concerned in the light of the answers given by the Court of Justice to the questions referred.

35

Furthermore, it must be stated that, according to settled case-law, in the procedure laid down by Article 267 TFEU, providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the referring court with an answer which will be of use to it and enable it to determine the case before it. In that light, the Court may have to reformulate the questions referred to it (judgment of 3 June 2021, BalevBio, C‑76/20, EU:C:2021:441, paragraph 51 and the case-law cited).

36

In the present case, it is apparent from the request for a preliminary ruling that the referring court asks the Court, in the first place, by its first to third and fifth questions, about the interpretation to be given to headings 1511 and 1517 of the CN for the purposes of the tariff classification of the goods at issue and, in the second place, by its fourth question, asks the Court to clarify whether, in the absence of methods and regulatory criteria relating to the analysis of the consistency of a product such as that at issue in order to prove its treatment by texturation, the customs authorities are authorised to develop and apply their own analytical procedures.

37

By its first to third and fifth questions, which it is appropriate to examine together, the referring court asks, in essence, whether the CN must be interpreted as meaning that a product described by its producer as ‘textured palm oil’ comes under heading 1511 or heading 1517 of that nomenclature.

38

According to the general rule 1 for the interpretation of the CN, the tariff classification of goods is to be determined according to the terms of the headings and any section or chapter notes to that nomenclature. In the interests of legal certainty and ease of control, the decisive criterion for the tariff classification of those goods must be sought, in general, in their objective characteristics and properties, as defined by the wording of the relevant heading of that nomenclature and the corresponding section or chapter notes (judgment of 9 March 2023, SOMEO, C‑725/21, EU:C:2023:194, paragraph 28 and the case-law cited).

39

As regards the Explanatory Notes to the HS and to the CN, the Court has repeatedly held that, although they do not have binding force, they are an important means of ensuring the uniform application of the Common Customs Tariff and, as such, may be regarded as useful aids to its interpretation (judgment of 9 March 2023, SOMEO, C‑725/21, EU:C:2023:194, paragraph 29 and the case-law cited).

40

Heading 1511 of the CN covers, according to its wording, ‘palm oil and its fractions, whether or not refined, but not chemically modified’.

41

It should be noted in that regard that it is apparent from the Explanatory Note to the HS for heading 1511 of the HS, the wording of which is identical to that of heading 1511 of the CN, that palm oil is used for a number of purposes and that, when refined, it is used in food, in particular as cooking fat and in the manufacture of margarine.

42

Heading 1517 of the CN includes, in addition to ‘margarine’, ‘edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516’, that is to say, other than ‘animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not refined, but not further prepared’.

43

It is apparent, first, from the Explanatory Note to the HS for heading 1517 of the HS, the wording of which is identical to that of heading 1517 of the CN, that that heading covers, inter alia, products ‘the fats or oils of which may previously have been hydrogenated, may be worked by emulsification …, churning, texturation …, etc.’. As regards, more specifically, the concept of ‘texturation’, it is defined in that Explanatory Note to the HS as a ‘modification of the texture or crystalline structure’. It is further stated therein that that heading also covers preparations obtained from a single fat or oil, even hydrogenated, which have been treated in a non-exhaustive manner by one of the processes listed in that explanatory note, which include texturation. That explanatory note expressly cites, among the ‘main products’ under heading 1517, ‘shortenings’ which, according to that note, are ‘produced from texturised oils or fats’. Lastly, it is stated that ‘the heading does not include single fats and oils simply refined, without further treatment; these remain classified in their respective headings even if they are put up for retail sale’.

44

It must be inferred from this that the essential characteristic of the goods capable of coming under heading 1517 is that they constitute ‘mixtures’, that is to say, products obtained from mixtures of fats and/or oils, or ‘preparations’, that is to say, products obtained from a single fat or oil which has undergone processing, by means of the processes which are, by way of guidance, referred to in the relevant Explanatory Notes to the HS. It is clear that there is nothing in the CN, or in the Explanatory Notes to the CN or to the HS, to indicate that, in order to be classified under heading 1517, a mixture or a preparation must have undergone a treatment which results in the chemical modification of its constituent products.

45

On the other hand, heading 1511 covers both crude palm oil and its fractions as well as refined palm oil and its refined but not chemically modified fractions. Consequently, palm oils which have undergone treatment other than refining cannot come under that heading. In that regard, the question whether those products have been chemically modified as a result of that treatment is irrelevant.

46

Therefore, in order to rule out the classification of the products at issue under heading 1511, it is sufficient to determine whether those products have undergone any treatment other than refining, such as texturation, which consists, according to the Explanatory Note to the HS relating thereto, in the modification of the texture or crystalline structure of the products concerned.

47

Subject to the assessment of all the facts available to the referring court, which it is for that court to undertake in that regard, it is apparent from the order for reference that the product at issue is refined, bleached and deodorised palm oil. As the referring court states, it is also apparent from the certificates provided by the oil producer that it is ‘textured’. It must also be inferred from the request for a preliminary ruling that NTK 2004 does not dispute, in the context of the dispute in the main proceedings, that that product may have undergone treatment other than refining. It emphasises, in that regard, first, that all refined oils undergo certain stages of the texturation process forming an integral part of refining and packaging and, second, that that product has not undergone any chemical modification, which is sufficient to justify its classification under heading 1511 and to rule out its classification under heading 1517.

48

In the light of the foregoing, it must be held that a product with objective characteristics and properties such as those of the product at issue is capable of coming under heading 1517, subject to the checks which it is for the referring court to carry out as regards the physical characteristics of that product, in the light, in particular, of the claims of the parties to the main proceedings relating to it (see, by analogy, judgment of 19 October 2017, Lutz, C‑556/16, EU:C:2017:777, paragraph 53). More specifically, in order to determine whether that product falls under heading 1511 or heading 1517, that court will have to examine, on the basis of the information available to it and the results of the analyses carried out by the customs authorities, whether that same product underwent a treatment other than refining.

49

Therefore, the answer to the first to third and fifth questions is that the CN must be interpreted as meaning that a food preparation of palm oil which is not covered by heading 1516 of that nomenclature and which has undergone treatment other than refining falls under heading 1517 of that nomenclature, the question whether that preparation has been chemically modified as a result of that processing being irrelevant in that regard.

50

By its fourth question, the referring court asks, in essence, the Court to clarify whether, in the absence of regulatory methods and criteria relating to the analysis of the consistency of a product such as that at issue in order to prove its treatment by texturation, the customs authorities are authorised to develop and apply their own analytical procedures.

51

It is clear that neither the CN nor the Explanatory Notes thereto indicate any specific method according to which it is necessary, where appropriate, to analyse the consistency of a product such as that at issue.

52

However, even where a method is specifically provided for in the Explanatory Notes to the CN, it is not to be regarded as the only method applicable for the purposes of analysing the essential characteristics of the products concerned, such as their consistency (see, to that effect, judgment of 12 June 2014, Lukoyl Neftohim Burgas, C‑330/13, EU:C:2014:1757, paragraph 51 and the case-law cited).

53

It follows that, if the customs authorities of a Member State or an economic operator consider that a method laid down in the Explanatory Notes to the CN does not lead to a result consistent with the CN, they may bring an action before the competent authority. In such a case, it will be for the court seised to decide which method is most appropriate for determining the characteristics of the products concerned which are essential to their classification (see, to that effect, judgment of 12 June 2014, Lukoyl Neftohim Burgas, C‑330/13, EU:C:2014:1757, paragraphs 54 and 55). A fortiori, it must be held that, where no method is provided for by the applicable legislation, the customs authorities are free to apply the method of their choice, provided that that method is capable of producing results consistent with the CN, which it will be for the national court to verify in the event of a challenge.

54

In the light of the foregoing considerations, the CN must be interpreted as meaning that, in the absence of methods and criteria defined in that nomenclature for the purposes of determining whether a food preparation of palm oil which is not covered by heading 1516 of that nomenclature has undergone treatment other than refining, the customs authorities may choose the appropriate method for that purpose, provided that it is capable of producing results consistent with that nomenclature, which it is for the national court to verify.

55

Since 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 (Tenth Chamber) hereby rules: