1.

In the present case the Bundesfinanzhof (Federal Finance Court) has referred to the Court of Justice the classification for customs tariff purposes of a ‘basic module’.

2.

On 13 January 1993 the competent Oberfinanzdirektion (Principal Revenue Office) issued VOBIS with a binding customs tariff notification for a ‘computer housing with built-in floppy-disk drives (compact)’. According to the description of the item in the binding customs tariff notification, it is a basic module (c. 27 χ 41 χ 15 cm; weight c. 8.1 kg) for the digital processing unit of an automatic data-processing machine, containing in a metal housing with display and operating features a power supply, two disk drives and connection cables, without the components necessary for operation as a central unit. As appears from the pleadings, the basic module is to be combined with further units to make up a complete digital data-processing machine. A central unit will be incorporated, to which the drives already contained in the basic module will be connected. The parties are in dispute as to whether the module is to be assigned as a unit or a part. The Oberfinanzdirektion takes the latter view. It assigned the basic module to subheading No 84733090 of the Combined Nomenclature. ( 1 ) That heading reads:

VOBIS does not agree with that classification. It takes the view that the basic module constitutes a unit within the meaning of the relevant provisions. VOBIS eventually brought proceedings seeking classification under subheading No 847193. That heading reads:

VOBIS's appeal on a point of law came before the Bundesfinanzhof. As appears from the order for reference, that court is inclined to classify the basic module as a part, but cannot rule out the possibility that the item is to be regarded as a drive unit with extra features.

3.

The Bundesfinanzhof therefore referred the following questions to the Court of Justice for a preliminary ruling:

4.

The classification of parts is regulated in Note 2 to Section XVI of the Combined Nomenclature. That note provides that parts of machines, where they are not expressly excluded from Section XVI, are to be classified according to the following rules:

...’

5.

There are also notes to Chapter 84 of the Combined Nomenclature. They contain, for example, the definition of automatic data-processing machines:

6.

Finally, there are also General Rules for the interpretation of the Combined Nomenclature which are also of relevance here. They concern the classification of incomplete goods and of goods which consist of different components. They provide in detail:

‘Classification of goods in the combined nomenclature shall be governed by the following principles:

...’

7.

Classification of the basic module as a ‘part’ presupposes, under Note 2(a) to Chapter XVI, that the basic module is not a product within a heading of Chapter 84; if it were, it would have to be assigned to that heading, regardless of what machine it was intended for. As the Bundesfinanzhof itself states, classification under heading No 8471 — automatic data-processing machines and parts thereof — also comes into consideration. According to the definition of a digital automatic data-processing machine in Note 5(A)(a) to Chapter 84, it must inter alia be capable of performing arithmetical computations specified by the user and of executing, without human intervention, a processing program which requires it to modify its execution, by logical decision during the processing run. Those tasks cannot be performed by the basic module, since the central unit has not yet been incorporated and it thus contains only two disk drives.

8.

The Commission refers in this connection to the Explanatory Notes of the Customs Cooperation Council on the harmonized system (hereinafter ‘the Explanatory Notes’). As the Court has consistently held, the Explanatory Notes are also to be taken into account for the tariff classification of goods. ( 4 ) They state that digital data-processing machines usually consist of a number of units and then form a system. Such a system must comprise at least a central unit, an input unit and an output unit. ( 5 ) Since the basic module does not contain the necessary components for operation as a central unit, the Commission too concludes that classification as a data-processing machine is impossible.

9.

According to Note 2(a) of the General Rules, an incomplete or unfinished article can be also classified under the heading for that article. That presupposes, however, that it already has the essential character of the complete or finished article. As the Commission rightly submits, it is the central unit which is regarded as the characteristic feature of the complete article (the data-processing machine). Since the basic module precisely does not contain a central unit, it cannot be classified as an incomplete data-processing machine either.

10.

Heading No 8471 mentions not only automatic data-processing machines, however, but also units thereof. What is to be understood by a ‘unit’ is defined in Note 5(B) to Chapter 84. A unit is to be regarded as a part of a complete system if it fulfils two conditions: it must be connectable to the central unit either directly or through one or more other units, and it must be specifically designed as part of such a system. If that definition is applied to the basic module, it cannot be regarded as a unit. The basic module is precisely not to be connected to the central unit; instead the central unit is incorporated into the basic module. It is the disk drives which are then connected to the central unit, not the whole basic module.

11.

That conclusion is unconvincing in that the basic module contains two disk drives which indisputably meet the requirements of Note 5(B) to Chapter 84 and are thus to be regarded as units. In the national court's opinion, the drives have lost their independence as a result of incorporation and have been subsumed into a new product which is to be assessed according to its own character. However, that new product is also intended to be combined with other units to make up a data-processing machine. It would be no different if the parts contained in the basic module were assembled inside a separate housing as a data-processing machine. The disk drives would then be regarded as units. In the basic module they would not be, although fulfilling the same function.

12.

VOBIS refers in this connection to a judgment of the Bundesfinanzhof which states that if machines are presented in compact form, their components are also to be regarded as units. In VOBIS's opinion, parts of compact devices which have the same technical characteristics as units of systems (see Note 5(B) to Chapter 84) must be regarded as units. The drives had not lost their independence by being incorporated. Instead they had assumed the characteristics of the other components of the basic module, since they outweighed those components both with respect to their significance for the use of the product and with respect to value. Whether the central unit was built into the basic module or the module connected to the unit was of no relevance. Moreover, it could not be deduced from Note 5(B) to Chapter 84 that every unit had to be inside a separate housing. The note merely points out that automatic data-processing machines can also occur as systems. In VOBIS's opinion, that does not mean that compact devices with several units in one housing cannot also be classified under heading No 8471.

13.

That must be accepted. Nevertheless, the basic module cannot definitely be classified as a unit of a digital data-processing machine. Classification as a part in heading No 8473 would thus also be possible.

14.

If there are two possible headings for the classification of a product, classification is effected in accordance with Rule 3 of the General Rules. Rule 3(b) is relevant in the present case. As the Commission rightly submits, the basic module is a composite product. There is no inseparable connection between the individual components. According to the Explanatory Notes, however, that is irrelevant, provided that the components are adapted one to the other, are mutually complementary, and together form a whole which would not normally be offered for sale in separate parts. ( 6 ) The basic module satisfies those conditions. It is therefore to be classified, under Rule 3(b), according to the component which gives it its essential character. Decisive factors here are the nature of the components, their bulk, quantity, weight or value, and their role in relation to the use of the goods. ( 7 ) As the Commission rightly submits, the nature, bulk, quantity and weight of the various components cannot be of any great significance in this case, since they are not important for the function of the basic module. Instead the value of the components and their role in relation to the use of the goods are decisive. As the Commission submits, the display and user elements and the connection cable and housing are of subordinate importance only. They serve either to make the drives and power supply usable for the actual purpose — the automatic processing of data — or as protection for the components which have been built in. The Commission is also right in presuming that from the point of view of value the drives are the most important components. Above all if one considers the purpose, namely automatic data processing, it is the drives, not the power supply unit, which are to be regarded as the components which determine the essential character. From that it follows that the basic module is to be classified, like the components which determine its character, namely the drives, as a storage unit in subheading No 84719359. The answer to Question 1 must therefore be that the basic module is to be classified pursuant to General Rule 3(b) as a storage unit in subheading No 84719359, on the basis of the drives it contains.

15.

Since Question 2 only arises if the answer to Question 1 is in the negative, there is no need to answer it here.

16.

I therefore propose the following answer to the questions referred for a preliminary ruling:

The Common Customs Tariff — Combined Nomenclature 1993 — is to be interpreted as meaning that a basic module for the assembly of a data-processing machine, consisting of a housing essentially with two disk drives, is to be classified pursuant to General Rule 3(b) as a ‘storage unit’ in subheading No 84719359, on the basis of the drives it contains.