On 21 September 2023, the European Court of Justice (“ECJ“) gave its judgment in a case concerning the non-preferential rules of origin (“ROO“) as laid down in the European Commission’s Union Customs Code Delegated Act (“UCC DA“), which supplements the Union Customs Code (“UCC“). The ECJ concluded in this case that the ‘Change of Tariff Heading‘ (“CTH“) ROO laid down in the UCC DA can be deemed invalid in the light of the Treaty of the Functioning of the European Union and the UCC.

This case is interesting in two respects:

  1. What ROO apply in determining the non-preferential origin of goods imported into the EU; and
  2. That the ECJ will not hesitate to rule that delegated legislation adopted by the European Commission is invalid where the European Commission exceeded its powers (which are limited to supplementing or amending non-essential elements of the legislation).

Non-preferential ROO are used to determine the country of origin of products for the application of policy measures, such as anti-dumping duties, trade embargoes, and other measures set up to safeguard the EU internal market. According to the UCC, products whose production involves more than one country, are deemed to originate in the country where they underwent their last, substantial, economically justified processing or working. This processing or working should result in the manufacture of a new product or represent an important stage of manufacture. The European Commission has the discretion to lay down specific ROO’s that must be met when determining the non-preferential origin for particular goods (i.e. rules for certain working or processing operations to qualify as the ‘last, substantial, economically justified processing or working‘).

The products subject to this ECJ case were classified under CN code 7304 41 (cold-drawn or cold-rolled tubes, pipes, and hollow profiles). The ROO for products classified under this code is the CTH rule. This rule means that, in order for the product to originate in the last country of manufacture, all non-originating materials used in the manufacturing process must be classified under a CN heading other that 7304. However, by contrast, for so-called ‘hollow profiles‘ classified under CN code 7304 49, the CTH rule does not apply, meaning that hollow profiles could obtain origin even if non-originating materials classified under CN code 7304 are used in their production.

The ECJ decided that the CTH rule does not comply with the main rule concerning non-preferential origin laid down in the UCC (i.e., the ‘last, substantial, economically justified processing or working‘-test), as a change of a 4-digit CN heading solely indicates the substantial nature of processing or working. However, processing or working operations may still be substantial when that processing or working brings a clear qualitative change to the product, even if the working or processing does not result in a CTH. In the underlying case, the European Commission adopted entirely different outcomes for similar working and processing operations, resulting in the exclusion of origin for tubes and pipes, but not for hollow profiles. The ECJ ruled that the ROO were therefore contradictory and discriminatory. Moreover, the European Commission did not provide any convincing justification for this difference in treatment. Thus, the ECJ held that the European Commission had exceeded its delegated powers and made a manifest error of assessment in adopting and exclusively relying on the CTH rule for determining the origin of the products in question.

This case represents an interesting example of the ECJ concluding that the European Commission has exceeded its powers when adopting delegated legislation. In the case of non-preferential origin more specifically, this case leads to the conclusion that the ROO set out in the UCC DA may not be as legally binding as they were previously thought to be. This means that, even where the ROO set out in the UCC DA is not met, a product may still qualify as originating in the last country of processing where the processing is “substantial” and “economically justified”. Please find the judgement via the following link: CURIA – Documents (europa.eu)


Jennifer is a Partner and head of Baker McKenzie's Customs & Excise Practice in London, and co-head of Baker McKenzie EMEA Customs group.


Jaap Huenges Wajer is a senior associate in the Indirect Tax Team in Baker McKenzie’s Amsterdam office. His practice is focused on advising national and international companies in all value added tax, customs and excise duty related matters. More specific, the emphasis for his advising role regards structuring of international sale and supply chains, optimizing inbound transactions in respect to customs, the litigation in value added tax, customs and excise duty matters. He advises clients across a number of sectors including pharmaceuticals, technology, manufacturing, energy and consumer goods.


Esmee Kooke is a Junior Associate within the Amsterdam Indirect Tax team. She joined the Firm in September 2023.