The reunited David & Baias and Peligrad Law teams obtain a reference decision of the European Union Court regarding the tariff classification of the cider-type drink, the Strongbow brand, which confirms that the excise duty level for this drink is zero

The combined teams of David & Baias (corresponding law firm PwC Romania) and Peligrad Law successfully represented HEINEKEN Romania SA before the Court of the European Union in a case with particular legal and fiscal stakes regarding the tariff classification of cider-type drinks, the “Strongbow” brand. The team of lawyers was coordinated by Ana Maria Iordache – Litigation Partner, David & Baias, and Vlad Peligrad – Coordinating Partner, Peligrad Law, together with Valentina Bogrea – Associate Lawyer, David & Baias, Paul Chichernea – Lawyer, David & Baias, and Călin Dragoman – Partner and coordinator of the litigation practice, Peligrad Law.

The decision given by the Court of the European Union has an impact not only on the case in Romania but on the entire territory of the European Union, as long as, in the interpretation of the tariff positions in the Combined Nomenclature, the Court of the European Union specified that the subheadings related to apple cider do not establish a minimum percentage of alcohol that must be obtained from the fermentation of apple juice, and in the absence of this percentage or threshold, in order to classify the tariff, the other characteristics of the drink must be observed, respectively, the organoleptic characteristics and the destination of the product.

Moreover, the European court restated the fact that heading 2206 and, by analogy, its subheadings relating to cider, expressly recognize the possibility of adding alcohol (from certain sources) to beverages falling under this heading, provided that they retain the character of the products classified under that heading.

The litigation concerned the tariff classification and, implicitly, the fiscal regime applicable to cider-type drinks, brand “Strongbow”, imported and marketed in Romania by HEINEKEN Romania SA. The products were initially classified by the company as apple/pear cider, a category for which the excise duty owed was 0 (zero), but later the customs authority considered that the significant percentage of alcohol coming from plants other than apples would require the reclassification of the products.

“This decision represents a fundamental landmark for the interpretation of the Combined Nomenclature at the level of the entire European Union. The court confirmed what we have argued from the beginning: the tariff classification cannot be reduced to a single quantitative criterion, but must reflect the objective reality of the product – its organoleptic characteristics, physical properties and commercial destination. For the industry, this means predictability and protection against arbitrary reclassifications,” he pointed out Ana Maria Iordache, Litigation Partner, David & Baias

“We built the entire strategy on the conviction that European customs law does not allow classifications based on thresholds that do not exist in the law. The EU Court validated this approach and reaffirmed an essential principle: where the norm does not impose a threshold, the authorities cannot invent one. It is a victory not only for HEINEKEN Romania, but for any economic operator that faces the uncertainty of tariff classifications in the European Union,” he stated Călin Dragoman, Partner and coordinator of the litigation practice, Peligrad Law.

The context of the dispute

The products were initially classified as apple/pear cider, a category for which the excise duty owed was zero, but later the customs authority considered that the significant percentage of alcohol coming from plants other than apples would require the reclassification of the products to tariff subheadings for which excise duties were owed.

HEINEKEN Romania SA obtained, before the Bucharest Court of Appeal, the annulment of the administrative-fiscal documents issued by ANAF, which established the tariff classification of the drink at positions 2206 00 39 and 2206 00 59 – in this sense, the technical expertise that confirmed the existence of the product's organoleptic cider characteristics was decisive.

The High Court of Cassation and Justice, judging the appeal filed by ANAF, considered that a release from the European court was necessary regarding the effects that the presence in the composition of the drink of an amount of alcohol from plants other than apple produces in terms of tariff classification. In this regard, the ÎCCJ asked the EU Court to specify whether a drink such as the one in dispute – composed of apple juice from fermented concentrate (25%), water, glucose-fructose syrup, malic acid, carbon dioxide, potassium metabisulfite and various flavors, containing alcohol from plants other than apples with a weight between 48% and 53%, but presenting the organoleptic characteristics of apple cider – falls under tariff subheadings 2206 00 31, 2206 00 51 or 2206 00 81 (zero excise duty in Romania) or to subheadings 2206 00 39 and 2206 00 59 (excise duty due).

Clarifications of the Court of the European Union

The arguments that the legal team successfully argued before the European court — related to the organoleptic characteristics of the product, its objective properties and the absence of a minimum percentage criterion of alcohol in fermented apple juice — were confirmed by the EU General Court, which reaffirmed the importance of the real / objective character of the product in determining the tariff classification.

In this sense, the essential principles established by the Tribunal are related to the following circumstances:

• There is no minimum percentage threshold of alcohol in fermented apple juice – §59: “Neither the CN nor the SA explanatory notes, regarding the tariff subheadings relating to apple cider, establish a minimum percentage of alcohol obtained by fermentation of apple juice […]. It cannot be inferred from the term “apple cider” alone in the text of these subheadings that a minimum percentage of fermented apple juice is required for a beverage to be classified in these subheadings.”
• The addition of alcohol is allowed, provided the character of the product is preserved – §60: “The HS Explanatory Note to heading 2206 expressly recognizes the possibility of adding alcohol to beverages of this heading provided that they retain the character of the products classified under that heading.”
• The organoleptic characteristics are decisive – §64–65: “Products of the type at issue in the main proceedings have the organoleptic characteristics of apple cider, in particular in terms of taste and smell […]. Despite the considerable share of alcohol from the fermentation of plants other than apples, as well as the addition of other substances, the latter have not lost the specific organoleptic characteristics of apple cider, which define its essential character.”
• The objective properties and the commercial destination confirm the classification – §66: “The objective properties and characteristics of the drinks in question, including their color and trade name, which associate the Strongbow mark with the word 'apple cider', correspond to those of drinks intended for consumption as apple cider.”

This ruling brings clarity to an area where administrative practice could generate uncertainty. The EU General Court confirms that there is no minimum percentage threshold of alcohol in fermented apple juice for classification under the subheadings related to cider and that the organoleptic characteristics and commercial destination of the product remain dominant.

For the industry, this means predictability and the avoidance of arbitrary tariff reclassifications, and for HEINEKEN Romania, it confirms the correctness of the initial classification and the soundness of the technical and legal arguments brought forward.

In conclusion, we appreciate that with today's ruling, the EU Court has reinforced the principle that the tariff classification must reflect the authentic perception of the product, reflected by the objective, organoleptic characteristics and the destination of the product.

Article supported by PwC Romania