Judgment — ECLI:EU:C:1998:155
Date: 1998-04-02
Language of the case: Finnish
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Free movement of goods;Customs Union;Internal taxation
Concepts: Prohibition of taxation on imported products in excess of that imposed on similar domestic products;Definition;Definition of internal taxation
Procedure: Reference for a preliminary ruling
Origin: Finland

summary of the national legislation 
which follows is drawn almost verbatim 
from the order for reference. 
3. Under the Eräiden energialähteiden valm­
isteverosta annettu laki (Law on excise duty 
on certain sources of energy, 1473/94), 1 coal, 
peat, natural gas, electricity and pine oil are 
subject to duty payable to the Finnish State, 
consisting of basic duty and additional duty. 
The customs authorities are responsible for 
administering the taxes on the products 
specified in the Law. By electricity the Law 
means electrical energy within heading 2716 
of the customs tariff referred to in the tax 
table annexed to the Law. Liable to pay duty 
on electricity are: 
(1) those who produce electricity in Finland 
by nuclear or water power; 
(2) those who in the course of a business 
receive electricity from the Community 
or import it from outside the Commu­
nity. 
Duty on electricity is not, however, payable 
on electrical energy which is produced in a 
generator with an output of less than two 
megavolt-amperes. It appears in addition that 
electricity generated from certain industrial 
waste and electricity generated from peat if 
production is no more than 25 000 MWh per 
annum is exempt from the duty. 
* Original language: English. 
1 — It appears that that law was repealed by Law 1260/1996 of 
30 December 1996 on the goods duty applicable to electric­
ity and certain fuels, which came into force on 1 January 
1997. 
I - 1 7 8 0 
OUTOKUMPU 
4. The tax table annexed to the Law is as follows: 
Product 
Product 
group 
Basic 
duty 
Additional 
duty 
Coal, coal briquettes, solid fuels 
processed from coal; lignite 1 — 116.1 mk/tonne 
Peat 2 — 3.5 mk/MWh 
Natural gas, gaseous 3 — 11.2 p/nm 3 * 
Electrical energy 
— produced by nuclear power 4 1.5 p/kWh 0.9 p/kWh 
— produced by water power 5 — 0.4 p/kWh 
— imported 6 1.3 p/kWh 0.9 p/kWh 
Pine oil 7 18.55 p/kg — 
1 — 'mk' and 'p' are abbreviations of the Finnish units of currency, markka and penni. 'kWh' and 'MWh' are abbreviations of 
kilowatt-hour and megawatt-hour. 
* The duty payable on natural gas for the period from 1 January 1995 to 31 December 1997 is reduced by 50%. 
5. The taxation of coal, electricity, natural 
gas, milled peat, sod peat and crude pine oil 
was based on environmental grounds. The 
total tax on the import of electricity was 
determined in such a way that it corre­
sponded to the average tax content of elec­
tricity produced in Finland. N o account was 
taken of the reduction of duty on peat and 
natural gas. 
The facts and the main proceedings 
6. Outokumpu Oy ('Outokumpu') is the 
holding company of a group which is among 
the biggest industrial consumers of electricity 
in Finland. Outokumpu inter alia sells elec­
tricity to its subsidiaries. Since 1 November 
1995 Outokumpu has been importing elec­
tricity from a Swedish generating company 
pursuant to a five-year supply contract. 
Before delivery of electricity under that con­
tract started, electricity was supplied by the 
Swedish company to Outokumpu for a trial 
period from 18 September 1995 to 9 October 
1995. Outokumpu made a tax declaration 
with respect to the trial supply to the Hels­
inki District Customs Office, submitting with 
its declaration a letter in which it expressed 
its opinion that the levying of the duty on 
electricity was contrary to Articles 12 and 13 
of the EC Treaty and that for that reason the 
duty ought not to be assessed. It appears that 
the customs office none the less decided that 
the duty was payable. Outokumpu appealed 
against that decision to the Lääninoikeus. 
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OPINION OF MR JACOBS — CASE C-213/96 
7. The Lääninoikeus decided to stay the pro­
ceedings and seek a preliminary ruling from 
this Court on the compatibility of the duty 
with Community law. The questions referred 
are prefaced by the following summary of 
the salient features of the relevant legislation: 
'Under Finnish national legislation on the 
taxation of energy, excise duty on electricity 
is levied in Finland on electrical energy pro­
duced there, the amount of the duty depend­
ing on the method of production of the elec­
tricity. On electricity produced by nuclear 
power, the excise duty charged is a basic 
duty of 1.5 p/kWh and an additional duty of 
0.9 p/kWh. O n electricity produced by water 
power, the excise duty charged is only an 
additional duty of 0.4 p/kWh. On electricity 
produced by other methods, for example 
from coal, excise duty is charged on the basis 
of the amount of input materials used to 
produce the electricity. On electrical energy 
produced by some methods, for example in a 
generator with an output below two 
megavolt-amperes, no excise duty at all is 
charged. On imported electricity, the excise 
duty charged, regardless of the method of 
production of the electricity, is a basic duty 
of 1.3 p/kWh and an additional duty of 0.9 
p/kWh. The excise duty on electricity is thus 
determined with respect to imported elec­
tricity on a different basis from that applied 
to electricity produced in Finland. The levy­
ing of excise duties determined on the basis 
of the method of production of the energy is 
founded on environmental grounds in the 
drafting history of the law. The amount of 
duty chargeable on imported electricity is 
not, however, determined on the basis of the 
method of production of the electricity. The 
excise duty chargeable on imported electric­
ity is higher than the lowest excise duty 
chargeable on electricity produced in Fin­
land, but lower than the highest excise duty 
chargeable on electricity produced in Fin­
land. The excise duty on imported electricity 
is levied on the importer, whereas the excise 
duty relating to electricity produced in Fin­
land is levied on the electricity producer. 
1. Is excise duty on electricity, determined 
for imported electricity in the manner 
described above, to be regarded as a 
charge having equivalent effect to a cus­
toms duty, within the meaning of 
Articles 9 and 12 of the EC Treaty? 
2. If it is not a charge having equivalent 
effect to a customs duty, is excise duty 
on electricity, determined for imported 
electricity in the manner described 
above, to be regarded as a tax which dis­
criminates against imports from other 
Member States, within the meaning of 
Article 95 of the EC Treaty?' 
8. Written observations have been submitted 
by Outokumpu, the Finnish and French 
Governments and the Commission. Outo­
kumpu, the Finnish Government and the 
Commission were represented at the hearing. 
9. Exhaustive detail of the applicable legisla­
tion has been provided by the applicant. 
Since however the essential features for the 
purpose of the questions referred have been 
supplied in exemplary and lucid fashion by 
the national court, both in the summary 
I - 1 7 8 2 
OUTOKUMPU 
prefacing the questions and in its précis of 
the legislation reproduced above, 2 I do not 
propose to set out the legislation in any fur­
ther detail save for the addition of the fol­
lowing table provided by the Finnish Gov­
ernment showing the comparative tax 
burden on electricity produced from all the 
sources concerned. 
Source of electricity mk/MWh Percentage of production 
Heavy fuel oil 43 2% 
Coal 43 19% 
Peat 9 8% 
Natural gas 15 9% 
Nuclear 24 27% 
Hydraulic 4 17% 
Imported 22 10% [of consumption] 
The Treaty provisions 
10. Articles 9 and 12 of the Treaty, in so far 
as is relevant to this case, provide as follows: 
'Article 9 
1. The Community shall be based upon a 
customs union which shall cover all trade in 
goods and which shall involve the prohibi­
tion between Member States of customs 
duties on imports and exports and of all 
charges having equivalent effect ... 
Article 12 
Member States shall refrain from introducing 
between themselves any new customs duties 
on imports or exports or any charges having 
equivalent effect, and from increasing those 
which they already apply in their trade with 
each other.' 
11. Article 95 of the Treaty provides as fol­
lows: 
'No Member State shall impose, directly or 
indirectly, on the products of other Member 
States any internal taxation of any kind in 2 — Paragraphs 3 to 5. 
I - 1783 
OPINION OF MR JACOBS — CASE C-213/96 
excess of that imposed directly or indirectly 
on similar domestic products. 
Furthermore, no Member State shall impose 
on the products of other Member States any 
internal taxation of such a nature as to afford 
indirect protection to other products. 
Member States shall, not later than at the 
beginning of the second stage, repeal or 
amend any provisions existing when this 
Treaty enters into force which conflict with 
the preceding rules.' 
The nature of the excise duty 
12. As a preliminary point I should observe 
that the Court has ruled that electricity 
comes within the meaning of 'goods'; it is 
accordingly the Treaty provisions on goods 
rather than services which are at issue. 3 As 
the Commission points out, however, the 
particular characteristics of electricity may 
give rise to problems in slotting it into a sys­
tem of goods tax. The Finnish Government 
adds that the market in electricity sales 
between Member States is significantly less 
developed and liberalised than the market in 
most other goods. National restrictions — 
legislative, technical and other — prevent 
free trade in electricity within the Commu­
nity, although the Nordic countries share a 
unified grid which makes trade in electricity 
practicable. 
13. It is settled case-law that a given levy 
cannot be both a charge having an equivalent 
effect under Articles 9 and 12 and internal 
taxation under Article 95. 4 
14. The Court has consistently held that any 
pecuniary charge, whatever its designation 
and mode of application, which is imposed 
unilaterally on goods by reason of the fact 
that they cross a frontier, and which is not a 
customs duty in the strict sense, constitutes a 
charge having equivalent effect within the 
meaning of Articles 9 and 12 of the EEC 
Treaty. 5 However, such a charge may not be 
so characterised if it forms part of a general 
system of internal dues applying systemati­
cally to categories of products according to 
objective criteria applied without regard to 
the origin of the products, in which case it 
falls within the scope of Article 95 of the 
Treaty. 
3 — Case C-393/92 Almelo [1994] ECR I-1477, paragraph 28 of 
the judgment, and Case C-158/94 Commission v Italy, judg­
ment of 23 October 1997, ECR I-5789, paragraphs 14 to 20. 
4 — See most recently Case C-90/94 Haahr Petroleum, judgment 
of 17 July 1997, ECR I-4085, paragraph 19, and 
Case C-28/96 Fazenda Publiai v Fricames, judgment of 
17 September 1997, ECR I-4939, paragraph 19. 
5 — See most recendy Haahr Petroleum, cited in note 5, para­
graph 20 of the judgment, and Fazenda Pública, cited in note 
5, paragraph 20. 
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OUTOKUMPU 
15. Although, as I stated in my Opinion in 
Haahr Petroleum, 6 the line between the 
parallel concepts of customs duties and 
charges having an equivalent effect, on the 
one hand, and internal taxation contrary to 
Article 95, on the other, is very fine, 7 
the Court has since its first decisions on 
the distinction between those concepts 
frequently reiterated that the essential feature 
of a charge having an effect equivalent to a 
customs duty which distinguishes it from an 
internal tax resides in the fact that the former 
is borne solely by an imported product as 
such whilst the latter is borne both by 
imported and domestic pro ducts. 8 
16. Since the Finnish duty on electricity 
applies to both imported and domestic elec­
tricity, it seems clear prima fade that it is not 
a charge having an effect equivalent to cus­
toms duties. 
17. The Finnish and French Governments 
and the Commission share that view and 
submit that the duty, forming part of a sys­
tem of general internal taxation, falls to be 
assessed under Article 95 of the Treaty. 
18. The Finnish Government contrasts a 
hypothetical duty imposed on imported 
products purely on account of their crossing 
a frontier, which would be a charge having 
an effect equivalent to a customs duty, with a 
duty such as that at issue in this case, which 
is applicable to both imported and national 
products. The chargeable event in both cases 
is the moment when the electricity enters the 
national grid. The duty on imported electric­
ity is part of a general system of taxes on 
production in which the method of produc­
tion has an effect on the rate of the duty. 
Only when that is not possible is the duty 
based on the final product. The duty thus 
applies both to electricity produced in Fin­
land and to imported electricity. The same 
authority collects the duty. The object of the 
duty was not to align the price of the 
imported and national products, but to arrive 
at a duty on imported electricity correspond­
ing to the average rate of the duty on elec­
tricity produced in Finland. 
19. The French Government notes that the 
legislation at issue is part of a general system 
of taxing energy, applicable to most non-
petroleum sources of energy. It refers to the 
Court's statement in Denkavit 9 that, in 
order to relate to a system of internal dues, 
the charge to which an imported product is 
subject must impose the same duty on 
national products and identical imported 
products at the same marketing stage, and 
the chargeable event giving rise to the duty 
must also be identical in the case of both 
products. The French Government considers 6 — Cited in note 5. 
7 — Paragraph 38. 
8 — See, for example. Case 78/76 Steinike und Wemlig v Ger­
many [1977] ECR 595, paragraph 28 of the judgment, Case 
32/80 Officier van Justitie v Kortmann [1981] ECR 251, 
paragraph 18, and Case 193/85 Co-frutta v Amministrazione 
delle Finanze dello Stato [1987] ECR 2085, paragraph 9. 
9 — Case 132/78 Denkavit v France [1979] ECR 1923, paragraph 
8 of the judgment. 
I -1785 
OPINION OF MR JACOBS — CASE C-213/96 
that those requirements are satisfied in this 
case. 
20. First, electricity generated in Finland is 
taxed on production, which amounts in prac­
tice to being taxed when it arrives on the 
grid. That is so in effect even for electricity 
generated from sources other than nuclear 
and hydraulic: even though in economic 
terms it is those sources which bear the duty, 
the duty is none the less directly propor­
tional to the amount of electrical energy 
delivered to the grid derived from those 
sources. Imported electricity is similarly 
taxed when it arrives on the national grid. 
The French Government submits that there 
is thus no need to attach any symbolic sig­
nificance to the crossing of the frontier. 
21. Secondly, even though the rates of duty 
applicable to domestic and imported electric­
ity differ, the unitary nature of the duty can­
not be denied. The duty is governed by the 
same law, and although there are different 
rates, it is not a question of one rate for 
domestic production and a separate rate for 
imports. If 'different rates' always meant 
'different tax', Article 95 would never be 
applicable where rates varied; the French 
Government doubts whether that was the 
intention of the authors of the Treaty. 
22. The Commission notes that there are 
certain borderline cases in the 'grey zone' 
between Articles 9 and 12 on the one hand 
and Article 95 on the other. There are clearly 
differences in the basis on which imported 
and domestic electricity are taxed in the 
present case. The fact that fiscal distinctions 
are drawn between domestic and imported 
products does not, however, necessarily 
mean that Article 95 is inapplicable, since the 
very purpose of Article 95 is to prevent any 
discrimination to the detriment of imported 
goods. The Commission accordingly consid­
ers, to my mind correctly, that each border­
line case calls for a global assessment which 
takes account of the general objectives and 
the nature of the tax regime in question and 
compares the scope and effect of the systems 
applicable to imported and to domestic 
products. If the differences are sufficiently 
marked to preclude a straightforward 
comparison, that would tend to support the 
view that Articles 9 and 12 were at issue. 
23. The Commission notes that the regime 
for the taxation of energy in Finland appears 
to be a general fiscal regime: the imposition 
of the duty on both imported and domestic 
production and the procedure for its assess­
ment are laid down in the same legislation, 
the duty on imported electricity seems to 
have been calculated so as to correspond to 
the average rate of duty on domestic electric­
ity, the same authority, namely the customs, 
oversees the collection of the duty, and all 
the proceeds accrue to the State. The differ­
ences which may be detected are justifiable 
given the difficulty, even impossibility, of 
using the method of production as the deci­
sive criterion for the rate applicable to 
imported electricity. The Commission con­
cludes that the differences between the duty 
on imported electricity and that on domestic 
I - 1 7 8 6 
OUTOKUMPU 
electricity are not sufficiently flagrant for the 
former to be categorized as a charge having 
an effect equivalent to a customs duty within 
the meaning of Articles 9 and 12. The duty 
may on the other hand be considered to 
form an integral part of the general Finnish 
regime of excise duties applicable both to 
domestic goods and to goods originating in 
other Member States. 
24. I also consider that Article 95 applies. 
Outokumpu however submits that the duty 
on imported electricity is a charge having an 
effect equivalent to a customs duty and as 
such contrary to Articles 9 and 12 of the 
Treaty. It advances a number of arguments in 
support of that thesis. 
25. First, Outokumpu makes the somewhat 
axiomatic point that the duty on imported 
electricity is a duty on imports. However, 
that fact alone cannot in my view entail that 
it is to be categorized as a charge having an 
effect equivalent to a customs duty, since that 
would deprive Article 95 of any meaning. 
The fiscal framework within which a con­
tested tax is levied must be examined as a 
whole in order to determine whether it 
affects imports alone or both imported and 
domestic products, albeit at different rates. 10 
26. Secondly, Outokumpu refers to the pro­
vision in the Finnish law which provides that 
the duty on imported electricity is payable 
by the importer whereas the duty on elec­
tricity produced in Finland is payable by the 
producer. Outokumpu states that it is evi­
dent from that provision that the duty on 
imported electricity is levied by virtue of the 
crossing of a frontier between Member 
States. To my mind, however, that argument 
is no more decisive than the previous one: 
any tax affecting imports may be seen as due 
by reason of the crossing of a frontier. As I 
pointed out in my Opinion in Haahr Petro­
leum: 
'In this context, it is important to distinguish 
the fact that a tax is levied at the moment of 
importation from the question whether it is 
imposed solely on imports: the former is 
conceptually a different issue from the latter. 
The fact that the chargeable event for a given 
tax is importation is not decisive for the pur­
poses of its categorization under Articles 9 
to 13 on the one hand and Article 95 on the 
other: the chargeable event for value added 
tax on imports, for example, occurs when the 
goods are imported, but that does not of 
course mean that it is a charge on imports.' 11 
27. In any event, the Court has been pre­
pared to find certain taxes levied expressly 
10 — See Haahr Petroleum, cited in note 5, paragraph 25 of the 
judgment. 1 1 — Cited in note 5, paragraph 43. 
I -1787 
O P I N I O N OF MR JACOBS — CASE C-213/96 
on the crossing of a frontier to be within the 
scope of Article 95 rather than Articles 9 and 
12: see for example Commission v Italy, 12 
which concerned a 'frontier surcharge' 
imposed on certain imported mineral oils 
and derivatives, and Stier, 13 in which the 
Court stated that taxes such as the turnover 
tax at issue in that case came within the con­
cept of internal taxation referred to in Article 
95 even if charged at the moment of impor­
tation. 14 
28. Thirdly, Outokumpu argues that the 
duty on imported electricity is not applicable 
to domestic electricity in certain cases and 
hence, being to that extent specifically 
imposed on products imported from another 
Member State but not similar national prod­
ucts, is a charge having an effect equivalent 
to a customs duty. There appear to be several 
overlapping strands to that argument, which 
can be broken down into two principal sub­
missions. 
29. Outokumpu starts by asserting that, in 
relation to electricity generated in Finland 
from sources other than hydraulic or nuclear 
energy (namely coal, natural gas, fuel oil, 
peat), there is no duty on the finished prod­
uct as such since only the raw materials from 
which it is produced are taxed. 
30. That argument however appears to be 
misconceived. It is clear from the order for 
reference that what differentiates the duty 
levied on electricity from such sources from 
the duty on imported electricity and electric­
ity generated in Finland from nuclear or 
hydraulic power is the basis on which the 
rate of duty is calculated. While that differ­
ence may be of crucial relevance for deter­
mining whether the duty is contrary to 
Article 95, it cannot prevent the duty from 
falling within the scope of that provision. 
The Court has on many occasions held that 
taxes on imports and domestic production 
assessed on different bases fall to be assessed 
under Article 95: a particularly compelling 
analogy is perhaps provided by the Belgian 
and Luxembourg beer cases, 15 in which 
excise duty on domestic production of beer 
was calculated on the basis of the actual 
quantity of the intermediate product (hot 
wort) used in the manufacturing process 
whereas the duty on imported beer was cal­
culated on the basis of the quantity of the 
finished product, adjusted so as to take into 
account the notional amount of wort that 
will have gone into the production of the 
beer. 
31. In any event, even if it were the case that 
the duty was levied on the primary source of 
energy that would not of itself preclude the 
application of Article 95: the Court ruled at 
an early stage that the first paragraph of 
Article 95 covers all taxation which is actu­
ally and specifically imposed on the domestic 
product at all stages of its manufacture and 
marketing up to the stage at which the 
12 — Case 21/79 [1980] ECR 1. 
13 — Case 31/67 Stier v Hauptzollamt-Ericus [1968] ECR 235. 
14 — R 240. 
15 — Case C-152/89 Commission v Luxembourg [1991] ECR 
I-3141; Case C-153/89 Commission v Belgium [1991] ECR 
I-3171. 
I - 1 7 8 8 
OUTOKUMPU 
product is imported from other Member 
States. 16 Outokumpu recognises this in its 
submissions in the alternative alleging that 
the duty contravenes Article 95. 
32. In addition, Outokumpu makes a num­
ber of points concerning the different bases 
on which the duty on imports and on 
domestic production is calculated. It notes 
that, of national production, only nuclear 
electricity is subject to the basic tax, whereas 
all imported electricity is so subject and that 
imported electricity is subject to duty at a 
standard rate whereas national production is 
taxed at variable rates with some exemptions 
which, since they depend on the source of 
the energy which cannot be determined once 
electricity arrives on the grid, are not avail­
able for imported electricity. 
33. That argument is similarly unfounded. 
The Finnish Government disputes Outo-
kumpu's assertion that some electricity on 
the grid has benefited from exemptions, stat­
ing that the exemptions for electricity pro­
duced in generators with an output of less 
than two megavolt-amperes and for certain 
electricity produced from peat in practice 
affect only electricity produced for con­
sumption by the producer, for example in a 
hospital's emergency generator. However, 
even if the assertion were correct, it would 
be perverse if a system of taxation which 
provided for certain exemptions for domestic 
production could not fall within the scope of 
Article 95, since such a system is precisely 
the sort of system which Article 95 is 
designed to regulate. In any event it is clear 
from the case-law of the Court that Article 
95 applies in such circumstances: see, for 
example, Schüttle 17 and Commission v 
France. 18 The Court has even been prepared 
to find Article 95 applicable where all 
equivalent domestic products and the raw 
materials from which they were produced 
were exempt. 19 
34. Fourthly, Outokumpu refers to the prin­
ciple established by the Court that, in order 
to fall within the scope of Article 95 of the 
Treaty rather than Articles 9 and 12, the con­
tested measure must form part of a general 
system of internal taxation applying system­
atically to domestic and imported products 
according to the same criteria. 20 It refers to 
four criteria which allegedly differ depending 
on whether the excise duty is levied on 
domestic or imported electricity and con­
cludes that the duty is a charge having effect 
equivalent to a customs duty rather than 
internal taxation within the meaning of 
Article 95. 
35. First, Outokumpu asserts that the 
chargeable event is different: for domestically 
produced electricity, it is the production of 
16 — Case 28/67 Molkerei-Zentrale Westfalen v Hauptzollamt 
Paderborn [1968] ECR 143, p. 155. It may be noted that the 
French is somewhat clearer than the English. 
17 — Case 20/76 Schbttle v Finanzamt Freudenstadt [1977] ECR 
247, paragraph 21 of the judgment. 
18 — Case 196/85 [1987] ECR 1597, paragraph 7 of the judg­
ment. 
19 — Molkerei-Zentrale Westfalen v Hauptzoüamt Paderborn, 
cited in note 17. 
20 — Case 46/76 Bauhuis v Netherlands [1977] ECR 5, paragraph 
11 of the judgment. 
I - 1789 
OPINION OF MR JACOBS — CASE C-213/96 
the electricity or, in relation to electricity 
produced from sources other than nuclear or 
hydraulic, the use of the raw materials, 
whereas for imported electricity, it is the 
importation. As indicated above, however, 
the chargeable event for a duty which 
encompasses imports will frequently be the 
importation, and the Court has accepted that 
such a duty may none the less fall to be 
assessed under Article 95. Admittedly, the 
Court stated in Denkavit 21 that, in order to 
relate to a general system of internal dues, 
the chargeable event must be identical. That 
statement, however, has more recently been 
explained by the Court as follows: 
'As to the requirement that the chargeable 
events be identical, no difference may be dis­
cerned in the present case in the fact that the 
charge is levied on an imported product at 
the time of importation and on the domestic 
product when it is sold or used, for in actual 
economic terms the marketing stage is the 
same since both operations are carried out 
with a view to utilisation of the product.' 22 
36. Secondly, Outokumpu asserts that the 
duty is levied at a different stage: in the case 
of domestically produced electricity, the 
duty is levied at the stage of production 
whereas in the case of imported electricity it 
is levied at the stage of distribution or con­
sumption. This seems a somewhat artificial 
distinction when applied to a commodity in 
the nature of electricity, whose production is 
surely contemporaneous with release into 
the national grid. In any event, it is clear that 
the fact that the duty is levied at different 
stages in production and marketing does not 
preclude application of Article 95. 23 
37. Thirdly, Outokumpu argues that the 
basis of assessment is different: domestically 
produced electricity is subject to duty at dif­
ferent rates depending on whether it is 
nuclear or hydraulic, or is taxed only at the 
level of raw materials (and even that is differ­
entiated), or is not taxed at all, whereas 
imported electricity is taxed at a single, rela­
tively high rate, which is even higher if 
duties levied by the State of production are 
taken into account. Outokumpu cites a num­
ber of cases (in particular Bresciani, 24 Den­
kavit, 25 United Foods 26 and Commission v 
Belgium 27) in support of its argument that 
those differences are sufficient to take the 
duty on electricity outside the scope of 
Article 95. Those cases all concern the status 
of charges based on public health grounds 
and levied on certain imported animal prod­
ucts. It was unsuccessfully argued in each 
21 — Cited in note 10, paragraph 8 of the judgment. 
22 — Joined Cases C-149/91 and C-150/91 Sanders Adorn and 
Guyomarc'h Orthez v Directeur des Services Fiscaux des 
Pyrénées [1992] ECR I-3899, paragraph 18 of the judgment. 
See also the Opinion of Advocate General Mischo in Case 
C-235/90 Aliments Morvan [1991] ECR I-5419, at para­
graphs 8 to 11. 
23 — See Molkerei-Zentrale Westfalen, cited in note 17. 
24 — Case 87/75 Bresciani v Amministrazione Italiana delle 
Finanze [1976] ECR 129. 
25 — Cited in note 10. 
26 — Case 132/80 United Foods and Van den Abeele v Belgium 
[1981] ECR 995. 
27 — Case 314/82 [1984] ECR 1543. 
I - 1 7 9 0 
OUTOKUMPU 
case that the charges were internal taxation 
within the meaning of Article 95, rather than 
charges having an effect equivalent to cus­
toms duties, on the basis that there was a 
charge for an allegedly equivalent domestic 
check. Bresciani concerned a charge for a 
compulsory public health inspection of 
imported raw hides and a charge for a veteri­
nary inspection of domestic animals on 
slaughter the main purpose of which was to 
establish whether the meat was fit for con­
sumption. Denkavit concerned a charge on 
imported lard produced by rendering or 
solvent-extraction and a charge on the 
slaughter of domestic animals. United Foods 
concerned levies for the inspection of fish: 
the inspection of fish caught in national 
waters took place in fish markets and con­
cerned the hygienic standard, freshness and 
purity of the fish whilst the inspection on 
importation took place at customs offices 
and concerned in particular the health certifi­
cate, the means of transport and the state of 
preservation of the fish. Commission v Bel­
gium concerned a charge for health checks 
made on and after the slaughter of domestic 
poultry, based on the number of visits by the 
veterinarian and the number of animals, and 
a charge made on the importation of poul-
trymeat, based on weight. 
38. In my view those cases do not establish 
any general principle that the application of 
different bases of assessment to imports and 
national products is a decisive factor for the 
classification of a tax as a charge having an 
equivalent effect (although it is, of course, 
highly relevant to whether a tax is contrary 
to Article 95, and I shall return to it in that 
context). The charges at issue in all those 
cases were levied on a manifestly distinct 
basis for imports and national products and 
are for that reason to my mind not compa­
rable to the duty on electricity at issue in this 
case. The cases rather illustrate the Court 's 
understandable reluctance too readily to 
classify as internal taxation charges for health 
checks on imports merely because it is pos­
sible to identify some loosely equivalent 
domestic charge, and underline the principle 
that, as Advocate General Warner expressed 
it in Denkavit: 'for an impost to be regarded 
as forming part of the general internal 
taxation system of a Member State ... [the] 
circumstance that domestic products may be 
subjected to a burden similar to that affecting 
imports in some other way is not enough'. 28 
39. Finally, Outokumpu states that the duty 
is not levied on groups of products indepen-
dendy of their origin, since the rate of duty 
and the basis of assessment differ for electric­
ity produced in Finland and for imported 
electricity. Outokumpu asserts that a tax falls 
within the scope of Article 95 only if the 
provenance of the goods is irrelevant to the 
rate of the tax or the basis of assessment or 
the manner in which it is levied. That argu­
ment however is based on a misreading of 
28 — P. 1939. 
I - 1791 
OPINION OF MR JACOBS — CASE C-213/96 
the cases invoked by Outokumpu in sup­
port. Outokumpu refers to the Court's judg­
ments in Co-Frutta, 29 Simba 30 and OTO. 31 
In those cases, however, the Court in analys­
ing the levy at issue merely noted that 
whether the goods subject to it were pro­
duced at home or abroad seemed to have no 
bearing on the rate, the basis of assessment 
or the manner in which the tax was levied: it 
did not say that that was an essential require­
ment for the application of Article 95. I t 
would be anomalous if Article 95 could not 
apply to the most flagrant example of the 
mischief it is intended to remedy, namely 
explicitly differential rates of duty for 
imports and domestic products. It is in any 
event clear since the judgment of the Court 
in Haahr Petroleum 32 that Article 95 does 
apply to such a duty. 
40. I am accordingly not persuaded by 
Outokumpu's various arguments to the 
effect that the Finnish excise duty on 
imported electricity is a charge having an 
effect equivalent to a customs duty. In my 
view, the duty forms part of a general system 
of internal dues and consequently its com­
patibility with Community law falls to be 
assessed in the light of Article 95 of the 
Treaty. 
Compatibility of the duty with Article 95 
41. The first paragraph of Article 95 prohib­
its internal taxation in excess of that imposed 
directly or indirectly on similar domestic 
products. 
42. The Finnish Government is of the view 
that the duty falls to be assessed in accord­
ance with Article 95 but considers that it is 
compatible with that provision. In the 
absence of harmonisation of the relevant 
taxes, taxing imported electricity at an aver­
age rate is the only logical way to treat 
imported electricity equitably and falls 
within the Member State's domestic compe­
tence. 
43. Outokumpu argues that Law N o 
1473/1994 is incompatible with Article 95 in 
so far as it provides for an internal duty on 
imported electricity which, in the case of 
electricity produced from certain sources, is 
higher than the tax directly or indirectly 
imposed on the similar domestic product. 
44. I would at this point note the reference 
made by Outokumpu to the fact that elec­
tricity imported from Sweden (which 
according to Outokumpu is the only Mem-
29 — Cited in note 9, paragraph 12 of the judgment. 
30 — Joined Cases C-228/90 to C-234/90, C-339/90 and 
C-353/90 Simba and Others v Ministero delle Finanze 
[1992] ECR I-3713, paragraph 8 of the judgment. 
31 — Case C-130/92 OTO v Ministero delle Finanze [1994] ECR 
I-3281, paragraph 12 of the judgment. 
32 — Cited in note 5, paragraph 25 of the judgment. 
I - 1792 
OUTOKUMPU 
ber State which exports electricity directly 33 
to Finland) will already have borne duty 
imposed in Sweden which is not refunded on 
export. The cumulative effect of the Swedish 
and Finnish duties obviously further 
increases the difference between the total 
duties payable on imported electricity pro­
duced from certain sources (particularly elec­
tricity produced in hydraulic power stations 
built before 1978) and the duty payable on 
electricity produced in Finland from equiva­
lent sources. 
45. It is clear from the case-law of the Court 
that Community law does not prohibit 
effects of double taxation of this type. 
Although, as the Court has stated, the aboli­
tion of such effects is doubtless desirable in 
the interests of the freedom of movement of 
goods, that can only result from the har­
monisation of the national systems. 34 The 
increased differential attributable to the prior 
imposition of Swedish duties cannot there­
fore be regarded as discriminatory in effect. 
It may be noted moreover that Articles 95 to 
98 are based on the principle of destination 
taxation, namely that goods are taxed by the 
country of importation. In application of 
that principle, Sweden could lawfully refund 
on export the taxes borne by electricity pro­
duced in Sweden: see Article 96. 
46. The French Government, while recog­
nising that it is difficult, even impossible, to 
determine how imported electricity was pro­
duced, considers that the Finnish regime is 
contrary to Article 95: it is liable to discrimi­
nate against electricity imported from other 
Member States since such electricity may be 
taxed at a higher rate than the same amount 
of electricity generated in Finland from the 
same source materials. 
47. The Commission, which also concludes 
that the tax regime is incompatible with 
Article 95, refers in addition to the fact that 
electricity generated in Finland from certain 
sources and in certain circumstances enjoys 
exemption from the duty. 
48. The Court has ruled in a series of deci­
sions that the first paragraph of Article 95 is 
infringed where taxation on an imported 
product and that on a similar domestic prod­
uct are calculated in a different manner on 
the basis of different criteria, which lead, if 
only in certain cases, to higher taxation being 
imposed on the imported product. 35 Thus 
33 — Some may however have originated in Denmark. Russia is 
the other principal exporter to Finland. 
34 — Case 142/77 Statens Kontrol med Ædle Metaller v Larsen 
[1978] ECR 1543, paragraphs 32 to 36 of the judgment. 
35 — Case 45/75 REWE v Hauftzollamt Landau [1976] ECR 
181, paragraph 17 of the judgment; Case 127/75 Bobie v 
Hauftzollamt Aachen-Nord [1976] ECR 1079, paragraph 3; 
Commission v Luxembourg, cited in note 16, paragraph 20; 
Commission v Belgium, cited in note 16, paragraph 12; Case 
C-327/90 Commission v Greece [1992] ECR I-3033, para­
graph 12. See also my Opinion in Luxembourg and Bel­
gium, cited in note 16, at paragraph 26. 
I -1793 
OPINION OF MR JACOBS — CASE C-213/96 
the Court has ruled incompatible with 
Article 95 systems involving a graduated tax 
on domestic production and a flat-rate tax 
on imports, 36 a tax on domestic production 
involving calculation of actual wastage in the 
manufacturing process and a tax on imports 
involving a flat-rate assumption of wast­
age, 37 and a tax on domestic production 
based on the actual wholesale price and a tax 
on imports subject to a flat-rate increase of 
the basis of assessment. 38 
49. Since the structure of the Finnish excise 
duty on electricity at issue entails the possi­
bility that imported electricity produced 
from a given source will be subject to a 
higher rate of duty than electricity produced 
in Finland from an equivalent source, on the 
basis of the principle laid down in those 
decisions the duty is prima facie contrary to 
the first paragraph of Article 95. It would of 
course be otherwise if it could be shown that 
all imported electricity came from sources 
such that, if it had been produced in Finland, 
the duty would be the same as or higher than 
the flat rate levied on imports: if, for 
example, all imported electricity were gener­
ated from nuclear power, the total duty of 
2.2 p /kWh to which it would be subject 
would be less than the total duty of 2.4 
p/kWh to which electricity generated from 
nuclear power in Finland is subject. Since 
however it is common ground that it is not 
possible to determine the method of produc­
tion of imported electricity, it must be 
assumed that, at least in some cases, the duty 
borne by imported electricity exceeds that 
borne by nationally produced electricity 
from equivalent sources. 39 
50. The Finnish Government, however, 
argues that the fiscal structure is justified on 
environmental grounds. It refers to the 
Court's settled case-law to the effect that, at 
its present stage of development, Commu­
nity law does not restrict the freedom of 
each Member State to lay down tax arrange­
ments which differentiate between certain 
products, even products which are similar 
within the meaning of Article 95, on the 
basis of objective criteria, which may include 
the nature of the raw materials used or the 
production processes employed, and that 
such differentiation is compatible with Com­
munity law if it pursues objectives of econ­
omic policy which are themselves compatible 
with the requirements of the Treaty and of 
Community legislation. 40 It suggests that, in 
the light of Article 130r of the Treaty which 
sets out the objectives of the Community 
policy on the environment, those criteria 
include environmental concerns. The differ­
ent approach to taxing electricity produced 
36 — REWE and Bobie, cited in note 36. 
37 — Luxembourg and Belgium, cited in note 16. 
38 — Greece, cited in note 36. 
39 — See Luxembourg, cited in note 16, paragraph 25 of the judg­
ment, Belgium, cited in note 16, paragraph 16, and Greece, 
cited in note 36, paragraph 20. 
40 — See, for example, Commission v France, cited in note 19, 
paragraph 6 of the judgment. 
I - 1794 
OUTOKUMPU 
from different sources in its view reflects the 
only feasible way of linking environmental 
considerations and the taxation of electricity. 
51. While it is true that the Court has recog­
nised that differential tax regimes may be 
justified by objective criteria, it has always 
qualified that proposition with the require­
ment that, in order to be compatible with 
Community law, the detailed rules must be 
such as to avoid any form of discrimination, 
direct or indirect, in regard to imports from 
other Member States or any form of protec­
tion of competing domestic products. 41 
Even where the differential taxation pursues 
legitimate social or economic aims (and the 
Court implicitly accepted, even before the 
insertion of Article 130r in the Treaty, that 
ecological considerations could be a legiti­
mate aim 42), the fundamental principle of 
non-discrimination requires a neutral effect, 
and thus tax advantages, such as exemptions 
from or reduction of taxes, must be extended 
to imported products conforming to the 
same conditions as preferred domestic prod­
ucts. 43 
52. It may be noted that a Member State 
wishing to retain differential tax rates based 
on objective criteria such as, in the present 
case, the method of production is entitled to 
require appropriate evidence from the 
importer that those criteria have been met if 
that is feasible, provided that the evidentiary 
requirements are not stricter in respect of 
imported products than they are for similar 
national products or disproportionate to the 
goal pursued, namely to eliminate the risk of 
fraud. 44 
53. Where, however, that is not possible, a 
system which applies differential taxation 
based on the method of production to 
domestic products and a flat-rate tax to 
imports cannot, as the case-law now stands, 
be reconciled with Article 95, since the 
Court has held that differential treatment 
cannot be justified by practical difficulties in 
distinguishing imports satisfying different 
criteria. In REWE, 45 the Court stated: 
'This finding [of an infringement of Article 
95] cannot be refuted by the claim that 
although the imported product is taxed at a 
flat rate whilst the domestic product is taxed 
according to a sliding scale this is because the 
investigations which would be necessary in 
the former case could not be carried out. 
41 — See, for example, Cose 319/81 Commission v Italy [1983] 
ECR 601, paragraph 13 of the judgment; Case 106/84 Com­
mission v Denmark [1986] ECR 833, paragraph 22. 
42 — Case 21/79 Commission v Italy [1980] ECR 1. 
43 — Commission v Italy, cited in note 43, paragraphs 14 to 15 of 
the judgment; Commission v France, cited in note 19, para­
graph 7. 
44 — Italy, cited in note 43, paragraphs 20 and 21 of the judg­
ment, and France, cited in note 19, paragraphs 14 and 15. 
45 — Cited in note 36. 
I -1795 
OPINION OF MR JACOBS — CASE C-213/96 
Even though it might indeed be impossible 
to introduce the same sliding scale for the 
increase or reduction of taxation on both 
domestic and imported products, it is never­
theless possible to impose a single flat rate or 
fixed charge on both products in order to 
observe the prohibition on discrimination 
laid down in Article 95.' 46 
54. If, therefore, it is .not possible in practice 
for the importer in this case to prove the 
method of production of the electricity, it 
appears that the importing Member State has 
only one option: it must tax imports at the 
lowest rate applicable to domestic produc­
tion. O n the basis of the past decisions of the 
Court, a system of taxation of sources of 
energy in which the duty on imported elec­
tricity is, even if only in certain cases, higher 
than the duty on electricity produced 
domestically would seem to be contrary to 
the first paragraph of Article 95 of the 
Treaty. 
55. There are, however, certain features of 
the present case which have not coincided in 
any of the aforementioned decisions of the 
Court and which raise the question whether 
the existing principles should be extended to 
the present case. 
56. First and foremost, there seems to be a 
compelling justification for the tax system at 
issue in the present case: it appears that the 
differential rates of tax for domestic electric­
ity were set with a view to preferring elec­
tricity produced by methods less harmful to 
the environment over that produced by more 
damaging methods. The Finnish Govern­
ment's claim to that effect is supported by 
the structure of the tax rates, ranging from 
very heavy rates of tax on electricity pro­
duced from heavy fuel oil and coal to very 
low rates of duty on hydroelectric power. 
The setting of an average rate for imports 
will not of course affect the environmental 
impact of the imported electricity in the 
country in which it is produced, but appears 
to have been intended to correspond to the 
average rate applicable to national produc­
tion and thus to enable Finland to retain its 
environmentally motivated tax rates on 
national production. The Court in its deci­
sions on Article 95 has not hitherto directly 
considered the status of environmental con­
cerns as the driving force behind differential 
rates of tax. Although such concerns were in 
part behind the favourable tax treatment of 
regenerated oils in Italy, 47 the Court did not 
address the issue. It was, however, explored 
by Advocate General Mayras in his Opinion 
in that case. Having reached a preliminary 
conclusion that the divergences between the 
national laws may lead to disparities in the 
taxes charged on home-produced regener­
ated oils and similar imported products 
which may affect the functioning of the 
Common Market and distort competition, he 
continued: 'None the less removal of those 
disparities must in no circumstances have the 
result of adversely affecting the protection of 
the environment.' 48 
46 — Paragraph 15 of the judgment. Sec also Greece, cited in note 
36, paragraph 24. 
47 — Cited in note 43. 
48 — P. 21. 
I - 1 7 9 6 
OUTOKUMPU 
57. Since that case and other decisions of the 
Court on Article 95, the Treaties have been 
amended to emphasise environmental objec­
tives. Thus the preamble to the Treaty on 
European Union refers to the determination 
of the Member States to promote economic 
and social progress -within the context of 
reinforced environmental protection. 49 The 
Treaty establishing the European Commu­
nity, as amended by the Treaty on European 
Union, states that the Community shall have 
among its tasks to promote sustainable econ­
omic growth respecting the environment 50 
and that its activities shall include a policy in 
the sphere of the environment. 51 Article 
130r, already mentioned, is devoted to Com­
munity policy on the environment and pro­
vides in particular that environmental pro­
tection requirements must be integrated into 
the definition and implementation of other 
Community policies. 52 As Advocate Gen­
eral Fennelly commented in a recent case, the 
Community's powers and responsibility to 
ensure respect for the environment are in 
principle an inescapable adjunct of its pow­
ers and responsibility in relation to the regu­
lation of economic activity. 53 
58. In the specific area of electricity policy, 
the importance attached by the Council to 
the environmental incidence of methods of 
production is emphasised in the preamble to 
Directive 90/547 on the transit of electricity 
through transmission grids, 5 4 the preamble 
to which states: 
'energy policies, more than any other meas­
ure contributing to the achievement of the 
internal market, must not be implemented 
with the sole aim of reducing costs and 
maintaining competition, but must also take 
account of the need to ensure the security of 
supplies and the compatibility of energy pro­
duction methods with the environment; 
... to attain that objective, account should be 
taken of the specific characteristics of the 
electricity sector'. 55 
59. A further feature of the present case 
derives from the fact that electricity is, as 
indicated above, an unusual commodity 
which cannot comfortably be assimilated to 
other goods and products. Since it cannot be 
stored, its production is contemporaneous 
with its release onto the grid and hence its 
availability for consumption. For that rea­
son, it is common ground that it is not just 
difficult but impossible to identify the 
source, and hence the method of production, 
49 — Seventh recital in the preamble. 
50 — Article 2. 
51 — Article 3(k). 
52 — Third sentence of Article 130r(2). 
53 — Case C-44/95 Royal Society for the Protection of Birds 
[1996] ECR I-3805, paragraph 45 of the Opinion. 
54 — Council Directive 90/547/EEC of 29 October 1990, OJ 
1990 L 313, p. 30. 
55 — Fourth and firth recitals. 
I -1797 
OPINION OF MR JACOBS — CASE C-213/96 
of imported electricity. It may therefore not 
be appropriate to apply to electricity the 
principles developed in cases concerning 
goods such as alcohol, oil, and beer whose 
source is less elusive. 
60. The Court's previous case-law might be 
taken to suggest that a system of taxation in 
which differential rates are applied to domes­
tic production while an average of those 
rates is applied to equivalent imports can 
never be compatible with Article 95 since the 
application of a rate of taxation to imports 
which represents the average differential rate 
applied to domestic production may entail 
that some imports are taxed at a higher rate 
than equivalent domestic products. 56 That 
unequivocal conclusion seems inappropriate 
where imports are, as in the case of electric­
ity, inextricably pooled, so that no individual 
instance of a greater tax burden can be 
proved or even identified. In particular 
where, as here, the differential rates on 
domestic production are based on different 
methods of production and it is impossible 
to determine the method of production of 
imports or even to identify imports from a 
particular producer, a strict application of the 
Court 's earlier case-law would in practice 
mean that a Member State could never sub­
ject domestic production to differential rates. 
61. It was similarly the absence of any 
workable alternative which prompted the 
authors of the Treaty to provide in Article 97 
that Member States applying cumulative 
multi-stage systems of turnover tax were 
permitted to establish average rates for prod­
ucts or groups of products while respecting 
the principles laid down in Articles 95 and 
96 of the Treaty. It is true that the broad 
application of turnover taxes to many cat­
egories of goods and services meant that the 
use of average rates was deemed ultimately 
not to be a satisfactory solution, with the 
result that the cumulative multi-stage sys­
tems were eventually replaced by the Com­
munity legislature with the common system 
of value added tax. The problems arising in 
relation to electricity are however much 
more specific and are due to the particular 
characteristics of the product. It seems to me 
that to deprive Member States, in the absence 
of Community rules on the matter, of any 
possibility of using a system of differential 
taxation to pursue aims of environmental 
policy in relation to the production of elec­
tricity would be disproportionate given that 
properly calculated averages do not entail 
any overall restriction on imports, that any 
discrimination in individual cases is pre­
sumed and unquantiñable and that no other 
means of achieving the environmental objec­
tive seems readily available. 
62. In order, however, for a flat-rate duty on 
imports to be permissible in such circum­
stances, the average must be correctly calcu­
lated. In particular it must be weighted so as 
precisely to reflect the spread of the domes­
tic products subject to differential taxation; 
moreover the weighting must be regularly 
reviewed in the light of changing patterns of 
production. The table provided by the Finn-56 — See the cases cited in note 40. 
I -1798 
OUTOKUMPU 
ish Government (set out at paragraph 9 
above) suggests that the rate of 22 mk/MWh 
imposed on imported electricity does repre­
sent an average of the rates of duty applied 
to domestic electricity from different sources 
weighted according to the quantity derived 
from each source (on the assumption that the 
figures given as percentages of domestic pro­
duction are actually percentages of domestic 
consumption): 
Source of electricity Amk/MWb Percentage 
of production 
A X B 
Heavy fuel oil 43 2% 86 
Coal 43 19% 817 
Peat 9 8% 72 
Natural gas 15 9% 135 
Nuclear 24 27% 648 
Hydraulic 4 17%/ 
82% 
68 
1826 
Weighted average rate applicable to domestic production (excluding 
8% of domestic production exempt from duty) 
1826/ 
82 
= 22.27 
Rate of duty applied to imports (representing 10% of consumption) 22 
On the basis of those figures, the duty 
imposed on imported electricity is approxi­
mately half that imposed on domestic elec­
tricity produced from heavy fuel oil and 
coal 
(representing 23% ( ( 2 % + 19%)/ 
90% ) 
of domestic production) 
and slightly less than that on domestic 
electricity produced from nuclear power 
(representing 30% ( 27%/ 
90% ) 
of national production). 
63. It is however for the national court to 
verify the accuracy of the figures presented 
by the Finnish Government and of the 
resultant average tax which can lawfully be 
imposed on imports. It may be noted that 
Outokumpu produces slightly different fig­
ures. It appears moreover that the average 
rate of 22 mk/MWh does not take account of 
the categories of electricity which are exempt 
from taxation (including electricity produced 
from certain industrial waste and by a gen­
erator with an output below two megavolt­
amperes). If that is so, the national court 
must verify whether such electricity is in a 
competitive relationship with imported elec­
tricity. That would be the case if it entered 
on to the national grid. 
I - 1799 
OPINION OF MR JACOBS — CASE C-213/96 
64. In the light of all the foregoing consider­
ations, I conclude that a system of taxation 
of electricity such as that at issue in the 
present case should not be regarded as 
infringing Article 95 where the average rate 
applied to imports has been correctly calcu­
lated. 
Conclusion 
65. Accordingly I am of the opinion that the questions referred by the Uudenmaan 
Lääninoikeus should be answered as follows: 
(1) A national system of taxing electricity under which electricity produced 
nationally is subject to excise duty levied at differential rates depending essen­
tially on the method of production whereas imported electricity, regardless of 
the method of production of the electricity, is subject to duty levied at a flat 
rate corresponding to the average of all rates applicable to national production, 
is not a charge having an effect equivalent to a customs duty within the mean­
ing of Articles 9 and 12 of the E C Treaty but internal taxation within the 
meaning of Article 95 of the EC Treaty. 
(2) Article 95 of the Treaty does not preclude a system of taxing electricity under 
which electricity produced nationally is subject to excise duty levied at differ­
ential rates depending essentially on the method of production in order to 
favour methods of production less harmful to the environment whereas 
imported electricity, of which the method of production is impossible to deter­
mine, is subject to duty levied at a flat rate corresponding to a properly 
weighted average of all rates applicable to national production. 
I-1800