This is specified in 8.2p7
7 Another ambiguity arises in a parameter-declaration-clause of a function declaration, or in a type-id that is the operand of a sizeof or typeid operator, when a type-name is nested in parentheses. In this case, the choice is between the declaration of a parameter of type pointer to function and the declaration of a parameter with redundant parentheses around the declarator-id. The resolution is to consider the type-name as a simple-type-specifier rather than a declarator-id.
Hence, your parameter has type int(*)(C)
, as you show in your first possible interpretation.