Judgment — ECLI:EU:T:2025:977
Date: 2025-10-22
Language of the case: Czech
Procedure: Reference for a preliminary ruling
Origin: Czechia

Translation  T-614/24 – 1 
Case T-614/24 
Request for a preliminary ruling  
Date lodged:  
13 November 2024 
Referring court:  
Nejvyšší správní soud (Czech Republic) 
Date of decision to refer:  
6 November 2024 
Applicant:  
AROCO, spol. s r.o. 
Defendant:  
Generální ředitelství cel 
  
1 Afs 75/2023 – 84 
ORDER 
The Nejvyšší správní soud (the Supreme Administrative Court, Czech Republic) 
has ruled […] in the case of the applicant: AROCO, spol. s r. o., […] v the 
defendant: Generální ředitelství cel (General Directorate of Customs, Czech 
Republic) […], in proceedings concerning the applicant’s appeal in cassation 
against the judgment of the Městský soud v Praze (Prague City Court, Czech 
Republic) of 13 April 2023 […], 
as  fo l l ows : 
[…] The following questions are hereby  subm it ted  to the Court of Justice of 
the European Union for a preliminary ruling: 
1. Is it compatible with the obligation of a Member State to apply the 
exemption from duty set out in Article 27(1)(e) of [Council] 
Directive 92/83/EEC of 19 October 1992 on the harmonization of 
the structures of excise duties on alcohol and alcoholic beverages 
to render an exemption for additives (ethyl alcohol-based flavours 
EN 
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falling under CN code 330210) conditional on the flavours being 
demonstrably used for the preparation of foodstuffs and non-
alcoholic beverages with an alcohol strength not exceeding 1.2% 
vol., and not on the fact that those additives are simply intended 
for that purpose? 
2. Is a Member State, pursuant to Article 27(1)(e) of Directive 
92/83/EEC, entitled to set conditions for the application of an 
exemption from duty in order to ensure the correct and 
unambiguous application of these exemptions and to prevent tax 
evasion, avoidance or abuse, if those conditions mean that the 
exemption may be claimed only by the first person that acquired 
the flavours when they were removed from the duty suspension 
arrangement, that person him or herself having demonstrably 
used the flavours for the preparation of foodstuffs and non-
alcoholic beverages with an alcohol strength not exceeding 1.2% 
vol.? 
[…] 
Grounds:  
I. Background of the case 
1 The applicant is a Czech company that manufactures flavours, food colourings, 
and confectionary additives from ethyl alcohol. The present dispute concerns 
specifically the packaging of ethyl alcohol-based flavours under the Combined 
Nomenclature code 330210 in a volume of 20 ml, which the applicant sells to, 
among others, entities that resell the flavours. The question raised in the 
proceedings is whether the flavours can be exempt from the alcohol tax, even 
though they were not, contrary to the national requirement, sold by the applicant 
directly to the end user of the flavour, and whether the national requirements for 
tax exemption are compatible with European Union law.  
2 Alcohol flavours are additives intended for flavouring foodstuffs and non-
alcoholic beverages, which are commonly used in small bottles, for example, for 
cooking or baking (consumers can choose between coffee, coconut, or rum 
flavour). Tax authorities and the Krajský soud (regional court) note, however, that 
they can be used for flavouring alcoholic beverages, and therefore to produce 
flavoured alcoholic drinks, whether in small (10 or 20 millilitre) or larger (1 litre) 
packages. 
3 Czech legislation, namely Zákon č. 353/2003 Sb., o spotřebních daních (Law 
353/2003, on excise duties), transposing Council Directive 92/83/EEC of 
19 October 1992 on the harmonization of the structures of excise duties on alcohol 
and alcoholic beverages (‘Directive 92/83/EEC’), conditioned the tax exemption 
on the basis of the authorisation in Article 27(1) of the Directive on the first 
purchaser of the flavours being a user listed in Paragraph 3 [(1)] (i) of the Law on 
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Excise Duties; at the same time, that user must, pursuant to Paragraph 72 of the 
same Law, claim the right to exemption with the supplier in writing. That means 
that the Law on Excise Duties makes it possible to apply a tax exemption only if 
the flavour is supplied directly to the person who acquired it upon its exemption 
from the conditional tax exemption regime (after its production) and who himself 
used it for the specified purpose (for flavouring foodstuffs or non-alcoholic 
beverages). The aim of this condition is to ensure that flavours that are exempt 
from the alcohol tax on account of its future use in the flavouring of foodstuffs 
and non-alcoholic beverages was indeed used in this way, thereby actually 
fulfilling the reason for the tax exemption (and this fulfilment of that reason can 
be easily checked by tax authorities). 
II. Proceedings to date 
4 On the basis of a tax inspection, the tax administrator issued, on 25 May 2021, a 
total of 18 tax assessments assessing the applicant for excise duty on ethyl alcohol 
for the tax period from January 2016 to June 2017, in a total of CZK 736,155, and 
laid down the obligation to pay a related periodic penalty payment of 
CZK 147,231. This was due to the fact that the applicant had applied a tax 
exemption for flavours without the legal conditions for the exemption being met. 
This was because it did not sell the flavours to (end) users within the meaning of 
Paragraph 3 [(1)] (j) and (i) of the Law on Excise Duties in the then-applicable 
version – that is, to persons who receive the flavour and consume it themselves at 
the same time (use it for the preparation of foodstuffs and non-alcoholic beverages 
with an alcohol strength not exceeding 1.2% vol.) – but also to other entities (in 
particular retail chains which subsequently offered the flavours for sale to end 
consumers). In that case, the exemption was contrary to Paragraph 72 (1) of the 
Law on Excise Duties. 
5 The applicant challenged the tax administrator’s decision by an appeal, which was 
dismissed. The subsequently filed action was dismissed by the Prague City Court, 
which agreed with the conclusion of the tax authorities that the application of the 
excise duty exemption to the resale of flavours to other users would result in the 
risk that the user will not use them for the purpose for which the products were 
exempt from the alcohol excise duty. According to the court, the condition 
restricting the exemption from the alcohol excise duty to those users who are, at 
the same time, the first buyers of the flavours, embodied in the Law on Excise 
Duties, is compliant with the objectives of Directive 92/83/EEC. The purpose of 
the condition is to prevent tax evasion, avoidance, or abuse. Use of the products 
within the meaning of Paragraph 3 [(1)] (i) of the Law on Excise Duties cannot be 
deemed to include the resale of products, but rather, their end use (addition to 
foodstuffs and non-alcoholic beverages). 
6 The applicant (‘the complainant’) therefore turned to the Supreme Administrative 
Court, lodging an appeal in cassation and objecting that both the defendant and the 
City Court had reached an incorrect legal conclusion. According to them, an 
alcohol tax exemption cannot be granted if the flavours are not sold by their 
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manufacturer to an entity that does not qualify as user under Paragraph 3 [(1)] (i) 
of the Law on Excise Duties, but rather, are delivered to a retail chain that resells 
the flavours to users. The complainant believes that the interpretation of the term 
user used by both the defendant and the City Court does not conform to EU law, 
and the Directive has been implemented into Czech law incorrectly. It considers 
the City Court’s interpretation of Directive 92/83/EEC, according to which the tax 
exemption is conditioned on the flavour being actually used for the flavouring of 
foodstuffs and alcoholic beverages, incorrect. 
III. Applicable law  
7 According to the Article 27(1) […] Directive 92/83/EEC in the then-applicable 
version, Member States shall exempt the products covered by this Directive from 
the harmonized excise duty, under conditions which they shall lay down for the 
purpose of ensuring the correct and straightforward application of such 
exemptions and of preventing any evasion, avoidance or abuse, 
(b) when both denatured in accordance with the requirements of any 
Member State and used for the manufacture of any product not for human 
consumption; 
(e) when used for the production of flavours for the preparation of 
foodstuffs and non-alcoholic beverages with an alcohol strength not 
exceeding 1.2% vol. 
8 Solely on the margins, the court of appeal on cassation notes that even though the 
Czech version of the Directive reads ‘členské státy mohou osvobodit’ (Member 
States may exempt), this is an incorrect translation, as is evident from the 
judgment of the Court of Justice of the EU in Case C-63/06 and from the current 
text of the provision which now reads: ‘musí’ (must). 
9 As the court of appeal on cassation will explain later, the Czech version of the 
Directive differs in meaning from other language versions of the Directive and 
results in questions as to its interpretation that could have had an impact on its 
transposition to Czech law. 
10 According to Paragraph 71(c) of the Law on Excise Duties, ethyl alcohol in 
substances intended for the flavouring of: 
1. beverages, where the ethanol strength in the beverages does not 
exceed 1.2% vol. or 
2. other foodstuffs, with the exception of products listed under 
nomenclature codes 2207 and 2208 
is also exempt from tax. 
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11 Pursuant to Paragraph 72(1) of the Law on Excise Duties, a user shall apply for a 
tax exemption for ethyl alcohol to which the provisions of Paragraph 71 (1)(a), 
(c), (d), (f), and (i) apply, no later than before the execution of a document 
regarding the release for free circulation of the ethyl alcohol by the payer. 
12 Pursuant to Paragraph 3[(1)](i) of the Law on Excise Duties, for the purpose of 
this Law, a user of selected tax exempt products (‘the user’) shall mean a natural 
or legal person who receives and uses selected tax exempt products or sells them 
to another user pursuant to Paragraph 52a or 53; users enjoy the status of tax 
entities not obliged to register.  
IV. Analysis of the questions referred  
IV. a First question: ‘end use’ of flavours  
General 
13 The Supreme Administrative Court has previously dealt with a similar legal issue 
in its judgments of 21 September 2022, ref. no. 7 Afs 204/2020 – 35 
(ECLI:CZ:NSS:2022:7.Afs.204.2020.35), and of 7 October 2022, ref. no. 8 Afs 
106/2020 – 49 (ECLI:CZ:NSS:2022:8.Afs.106.2020.49). In both decisions, it 
concluded in the context of the resale of hundreds of small packages of flavours 
between entrepreneurs, that the actual use of the flavours in the manner presumed 
by Directive 92/83/EEC is decisive. That means that thus far accepted is the 
requirement of the Law on Excise Duties that an excise duty exemption may be 
granted only if the flavour, once produced, is supplied directly to the end user, that 
is, a person who will use the flavour for the preparation of foodstuffs and non-
alcoholic beverages with an alcohol strength not exceeding 1.2% vol. 
14 In its judgment ref. no. 7 Afs 204/2020 – 35, paragraph 22, the court of appeal on 
cassation expressed the following conclusion that: ([a]s concerns the specific 
exemption under Article 27(1)(e) of Directive 92/83/EEC, its key property is that 
it explicitly links the exemption from the harmonised excuse duty on ethyl alcohol 
with the end use of ethyl alcohol-based flavours, rather than their general 
designation. The relevant criterion is not that the ethyl alcohol was used for the 
production of additives (ethyl alcohol-based flavours) in itself, but solely and 
exclusively additives in the production of foodstuffs and non-alcoholic beverages 
with an alcohol strength not exceeding 1.2% vol. It is not, therefore, an exemption 
for the ethyl alcohol contained in the additives intended for the production of 
specified foodstuffs and beverages, but in additives that are actually used in the 
prescribed manner, meaning that they are used for the production of such 
specified products (foodstuffs and non-alcoholic beverages with an alcohol 
strength not exceeding a set limit).’ The exemption of only those flavours which 
are also used by their first purchaser ensures that the alcohol duty is duly 
collected, and potential tax evasion is prevented. Hence, it found that the statutory 
requirements for the exemption are within the bounds of a state’s right to lay 
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down conditions pursuant to the introductory provisions of Article 27(1) of 
Directive 92/83/EEC. 
15 Pursuant to the answer to the first question in the judgment of the Court of Justice 
of the European Union of 22 December 2022, Quadrant, C-332/21, 
Article 27(1)(e) of Directive 92/83/EEC must be ‘interpreted as meaning that 
both ethyl alcohol used for the production of flavours intended, in turn, for the 
preparation of non-alcoholic beverages with an alcohol strength not exceeding 
1.2% volume and ethyl alcohol which has already been used for the production of 
such flavours are covered by the exemption provided for in that provision.’ 
16 According to the answer to the third question in the same judgment, 
Article 27(1)(e) of Directive 92/83/EEC must be ‘interpreted as precluding 
legislation of a Member State which makes the grant, to an economic operator 
marketing within its territory goods purchased from a seller located in the 
territory of another Member State in which they were manufactured, released for 
consumption and exempted from excise duty in accordance with that provision, of 
the benefit of that exemption provided for in that provision subject to the 
conditions that that operator has the status of registered consignee and that that 
seller has the status of authorised warehousekeeper, unless it follows from 
concrete, objective and verifiable evidence that those conditions are necessary to 
ensure the correct and straightforward application of such an exemption and to 
prevent any evasion, avoidance or abuse.’ 
17 In relation to Article 27(1) (b) Directive 92/83/EEC, according to which Member 
States shall exempt products when the products are both denatured in accordance 
with the requirements of any Member State and used for the manufacture of any 
product not for human consumption, the Court of Justice of the European Union 
ruled in its judgment of 28 February 2019, Bene Factum, C-567/17, that it: ‘must 
be interpreted as applying to ethyl alcohol that has been denatured in accordance 
with the requirements of a Member State and is contained in cosmetics or 
mouthwashes which, although not intended, as such, for human consumption, are 
nevertheless consumed as alcoholic beverages by certain individuals, when the 
person who imports those products from a Member State in order for them to be 
supplied to the end consumers in the Member State of destination by other 
persons, knowing that they are also consumed as alcoholic beverages, has them 
manufactured and labelled with that in mind in order to increase the sale of those 
products.’ 
18 The Court of Justice of the European Union consistently notes that the exemption 
of the products listed in Article 27(1) Directive 92/83/EEC from excise duty is the 
rule and its refusal is the exception (judgment in Quadrant, paragraph 46). 
Member States may lay down conditions for the purpose of ensuring the correct 
and straightforward application of exemptions set out in that provision, as well as 
for the purpose of preventing any evasion, avoidance or abuse. This option 
granted to Member States cannot, however, detract from the unconditional nature 
of the obligation imposed by that provision (judgment of the Court of Justice of 
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9 December 2010, Repertoire Culinaire, C-163/09, paragraph 51). In exercising 
that power, the Member State concerned must put forward concrete, objective and 
verifiable evidence of a serious risk of evasion, avoidance or abuse and that the 
conditions laid down by that Member State by virtue of the power thus conferred 
on it cannot go beyond what is necessary to attain that objective (judgment in 
Repertoire Culinaire, paragraph 52). The objective of the exemptions contained in 
Directive 92/83/EEC is, in particular, to neutralise the impact of excise duties on 
alcohol used as an intermediate product in other commercial or industrial products 
(judgments in Repertoire Culinaire, paragraph 48, Quadrant, paragraph 47 a 
Profisa, paragraph 17). In Quadrant, that product is a ‘flavour for the preparation 
of non-alcoholic beverages with an alcohol strength not exceeding 1.2% volume’. 
(opinion of Advocate General in Quadrant, paragraph 32). The exemption under 
that provision by a Member State depends on the end-use of the products in 
question (judgment in Quadrant, paragraph 44, judgment in Repertoire Culinaire, 
paragraph 49). 
19 The Supreme Administrative Court deems it necessary to draw attention to the 
questionable interpretation of Article 27(1)(e) of Directive 92/83/EEC. The 
differences in the authentic texts of the provisions result in questions about the 
actual meaning of the term ‘in the preparation’. 
20 The court of appeal on cassation is aware of the Court of Justice of the European 
Union’s case-law according to which all official languages are, at least from the 
formal point of view, authentic and equal in terms of their binding force (see 
Council Regulation 1/1958/EEC determining the languages to be used by the 
European Economic Community, and, for example, judgment of the Court of 
Justice of the European Union of 6 October 1982, Cilfit, C-283/81, paragraph 18). 
Hence, the Court of Justice of the European Union laid down a prohibition on 
isolation in the event of divergence between the various language versions – a 
national court must not restrict itself to merely the language version in the official 
language of its Member State and consider it decisive without further analysis, but 
in the event of questions, it must interpret the text of the provision concerned in 
light of versions in other official languages; however, at the same time, the Court 
of Justice of the European Union also laid down a prohibition on majorisation – 
the decisive meaning cannot be determined solely on the basis of the numeric 
majority of language versions, not even in cases when it is evident that there was a 
translation error in one of the language versions. Discrepancies in interpretation 
cannot therefore automatically resolved by preferring one language or the majority 
of languages, but it is necessary to establish the ‘true meaning’ of the legal text in 
question, based on the purpose and meaning of the legislation or on the basis of a 
systematic interpretation (see, e.g., judgments of the Court of Justice of the 
European Union of 18 September 2014, Vueling Airlines, C-487/12, 
paragraphs 30 and 31, Profisa, paragraphs 13 and 14, or of 28 March 1985, 
Commission v United Kingdom, 100/84, paragraphs 16 and 17). 
21 The interpretation of the provision formerly used by the Supreme Administrative 
Court and now also by the defendant and the City Court is based on the Czech 
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language version of the Directive, according to which an exemption applies to 
products that are ‘používány pro výrobu přísad při výrobě potravin a 
nealkoholických nápojů’ (used for the production of flavours in the production of 
foodstuffs and non-alcoholic beverages) (underscoring added). A similar 
translation could be used for the Estonian version which includes the word 
‘valmistamisel’, meaning ‘in the preparation’ or ‘in the production’ of foodstuffs 
and non-alcoholic beverages, which also applies to the condition for an exemption 
for the end use of flavours, solely for the set purpose. The Romanian version of 
the Directive, and the expression used by it – ‘folosite în productia’ (which can be 
translated as ‘used in the production’) could be interpreted similarly. 
22 On the other hand, other language versions of the Directive are closer to the 
meaning that presumes only a general designation of the flavours for the set 
purpose. They literally state that those additives are ‘intended’ for such 
preparation (in French ‘destinés à la préparation’, in Italian ‘destinati alla 
preparazione’, in Portuguese ‘destinados à preparação’, in Slovenian 
‘namenjenih za pripravo’). 
23 The term ‘end use’ is therefore applied by individual language versions of the 
directive either to the preparation or production of foodstuffs and non-alcoholic 
beverages or to the production of flavours that precedes it. The Court of Justice of 
the European Union provided a guideline for interpretation in Quadrant, stating 
that not only the ethyl alcohol from which a flavour is made must be exempt from 
excise duty, but also the flavour containing such exempt ethyl alcohol. Any other 
outcome would ‘not achieve the objective of neutralising the impact of excise 
duties on alcohol used for the production of flavours [intended for the preparation, 
modified by the court (based on the meaning of other language versions, see 
above] of non-alcoholic beverages with an alcohol strength not exceeding 1.2% 
volume (judgment in Quadrant, paragraph 49).’ 
24 In doing so, it proceeded on the assumption that the circumstance that determines 
the tax exemption laid down by Article 27(1)(e) of Directive 92/83/EEC is the end 
use of ethyl alcohol. It found two types of such end uses in the case before it: the 
production of flavours that themselves contained ethyl alcohol and the production 
of foodstuffs and the production of non-alcoholic beverages from those flavours. 
It also referred to the Guidelines of the Committee on Excise Duties which agrees 
to the use of the tax exemption from the production stage or the importation 
onwards to flavourings falling, in particular, under Combined Nomenclature 
heading 3302 – that is Mixtures of odoriferous substances and mixtures (including 
alcoholic solutions) with a basis of one or more of these substances, of a kind used 
as raw materials in industry; other preparations based on odoriferous substances, 
of a kind used for the manufacture of beverages (judgment in Quadrant, 
paragraph 48). 
25 It is not without significance that the preliminary question was raised in Romania, 
a Member State whose language version was close in meaning to the Czech 
version and which was at least unclear in the context of other language versions. 
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The Romanian legislation, based on that version of the Directive, granted 
exemption only to a user, subject to the condition that the supply was made 
directly from a tax warehouse (a condition similar to that in the Czech Republic). 
The end-user was required to have a licence. These conditions were found by the 
Court of Justice of the European Union to be unreasonable in the context of the 
fact that, in the State in which the flavours were produced (Ireland), they were 
exempted and released for consumption. 
26 As already mentioned, the Court of Justice of the European Union established 
dual use of ethyl alcohol in its judgment in Quadrant: ‘end-use consists, first, in 
the production of flavours themselves containing ethyl alcohol and, second, in the 
production of non-alcoholic beverages with an alcoholic strength not exceeding 
1.2% volume’. In the present case, unlike in Quadrant, actual use of flavour for 
flavouring foodstuffs or non-alcoholic beverages has not been documented; 
nevertheless, that aspect was irrelevant for a tax exemption pursuant to the 
national conditions, as they, without exception, do not provide any room for 
documenting the actual use of flavours if they are not sold by their manufacturer 
directly to the user but are, rather, resold. Furthermore, in paragraph 49 of its 
judgment in Quadrant, the Court of Justice of the European Union generally stated 
that it would be an inconsistent outcome (the Advocate General used the word 
‘absurd’) if the ethyl alcohol used for the production of flavours would be exempt 
according to the Directive, whereas the ethyl alcohol already incorporated into 
those flavours would not. Nevertheless, the question remains whether tax 
authorities are entitled to examine that second use of ethyl alcohol, that is, its use 
in the production of foodstuffs or non-alcoholic beverages and to subsequently 
condition an exemption from the tax on ethyl alcohol under Article 27(1) 
Directive 92/83/EEC on it. 
End-use for the production of flavourings from ethyl alcohol 
27 A certain guideline for interpretation could be found in the case-law of the Court 
of Justice of the European Union concerning other provisions of the same article 
of the Directive. In its judgment of 28 February 2019, Bene Factum, C-567/17, the 
Court of Justice interpreted Article 27(1)(b) of Directive 92/83/EEC, which lays 
down exemptions for products that are both denatured in accordance with the 
requirements of any Member State and used for the manufacture of any product 
not for human consumption. Like Article 27(1)(e), it therefore links the condition 
for exemption to the determination of the purpose of the use of the product. In 
paragraph 23, the Court of Justice of the EU stated that: ‘Products presented as 
cosmetics or mouthwash products which contain ethyl alcohol denatured in 
accordance with the requirements of a Member State, as products not intended for 
human consumption, cannot be denied the exemption from excise duty set out in 
Article 27(1)(b) of Directive 92/83 on the ground that certain individuals consume 
those products as alcoholic beverages. In the present case, it is common ground 
that the products at issue, which bear the trademark BF cosmetics, were sold as 
cosmetics or mouthwashes, and that the individuals who bought them as alcoholic 
beverages knew, or should have known, that they were buying cosmetics or 
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mouthwash products.’ [underscoring added]. The Court of Justice of the European 
Union concluded that it is the same in the event that the manufacturer and supplier 
of the products adapts their packaging and composition to their sale for human 
consumption, because ‘with the exception of cases of evasion, avoidance or abuse, 
justifying the application of Article 27(5) of Directive 92/83, as long as measures 
taken by the manufacturer of such products in relation to their characteristics do 
not prevent those products from appearing as products not intended for human 
consumption, then those measures cannot deprive those products of the exemption 
from excise duty set out in paragraph 1(b) of that article.’ 
28 Both the provisions under (b) and the provisions under (e) link the exemption to 
the purpose for which the products are made. The purpose of the products exempt 
under (b) is defined in negative terms – that is, uses not for human consumption, 
the purpose of the products exempt under (e) is their use in foodstuffs and non-
alcoholic beverages. 
29 Also the Advocate General in his opinion in Quadrant described (in paragraphs 35 
and 36) why the Committee on Excise Duty – to whose Guideline the Court of 
Justice of the European Union also refers – concluded that the exemption from 
alcohol duty should be applied from the moment of the production or import of 
the flavours:’ The Committee on Excise Duty first proposed that Member States 
grant the exemption where the flavours had been used to prepare non-alcoholic 
beverages subject to monitoring mechanisms established by the Member States.’ 
[…] However, on further reflection, the Committee on Excise Duty took account 
of the fact that the flavours are used predominantly as concentrates for the 
preparation of soft drinks. […] In the light of [their] characteristics, the 
committee could reasonably conclude that the grant of the exemption at the time 
of the production of the flavours would not give rise to a risk of tax evasion. It 
therefore proposed that the exemption in Article 27(1)(e) of Directive 92/83/EEC 
should apply from that time.’ 
30 It could therefore be concluded that an exemption under Article 27(1)(e) of 
Directive 92/83/EEC must be granted to such flavours that are intended for the 
expected use without examining and checking whether the products were indeed 
used for the purpose for which they are intended. It would follow from this that 
the actual meaning of Article 27(1)(e) of Directive 92/83/EEC should be that: 
Member States shall exempt the products covered by this Directive from the 
harmonized excise duty under conditions which they shall lay down for the 
purpose of ensuring the correct and straightforward application of such 
exemptions and of preventing any evasion, avoidance or abuse when used for the 
production of flavours intended for the preparation of foodstuffs and non-
alcoholic beverages with an alcohol strength not exceeding 1.2% vol. That means 
that the provisions of Article 27(1) Directive 92/83/EEC would authorise States to 
set conditions for an exemption, but it would mean the laying down of conditions 
to the extent to which production of flavours from ethyl alcohol is concerned, 
rather than the subsequent control of flavours once they have been produced. This 
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would give Member States the discretion to lay down conditions for exempting 
ethyl alcohol that is used for the purpose specified under (a) to (f). 
31 The Czech national conditions, however, make the exemption of flavours 
conditional once the flavours have been produced and are to be exempt. That 
regulation therefore sets conditions for the obligation to use products for the 
preparation of non-alcoholic beverages and foodstuffs, whereas the Directive 
would imply laying down conditions for the obligation to use the products in the 
production of flavours. In other words, the exemption conditions should apply to 
the ethyl alcohol used for the production of the flavours rather than to the 
exemption of the finished product (the flavour) if it is used for the purpose for 
which it is intended. 
End use of ethyl alcohol as use of flavours for the flavouring of non-alcoholic 
beverages or foodstuffs 
32 The issue of the end-use of ethyl alcohol can be viewed through the opposite lens. 
In line with paragraph 45 of the judgment in Quadrant, the interpretation of the 
end use of ethyl alcohol for flavouring non-alcoholic beverages and foodstuffs is 
also possible.  
33 If Article 27(1)(e) stipulates that the flavours must be used, among other things, 
for the production of non-alcoholic beverages with an alcohol strength not 
exceeding 1.2% vol., it can be inferred that there is an interest in examining the 
specific alcohol content in the end product. If the Directive sets a specific value 
for the alcohol strength of a flavoured beverage, there is no other way to ensure 
compliance with the requirements of the Directive than to check on the flavouring 
and to grant an exemption only after the actual use of the flavour is demonstrated. 
This is where the provisions under (e) differ from the above-mentioned provisions 
under (b) and its interpretation in the judgment in Bene Factum which only pertain 
to the requirement of being generally intended for human consumption. 
Conclusion 
34 It follows from the above that the Court of Justice of the European Union has yet 
to deal with an identical question, as the judgment in Quadrant pertained to a 
different factual situation – an exemption was sought by a purchaser of flavours 
and there was no dispute in the proceedings about the flavours being used by it for 
flavouring a non-alcoholic beverage – or it concerned different provisions of 
Article 27 of Directive 92/83/EEC. Hence, the court of appeal on cassation 
decided to refer the first question for a preliminary ruling. 
IV. b Second question: the risk of abuse 
35 Should the Court of Justice of the European Union conclude that the end use of 
ethyl alcohol also includes its use for flavouring foodstuffs and non-alcoholic 
beverages, and that the application of an alcohol tax exemption can be conditioned 
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on such a method of use, a question arises as to the compliance of the national 
exemption conditions with European Union law. 
36 In the context of the present case, it is not possible to ignore the degree of the risk 
of abuse of the tax regime, which can be higher than in other cases. The issue can 
therefore also be viewed such that the Czech legal regulation is capable of 
fulfilling the conditions of Article 27(1)(e) of Directive 92/83/EEC, given that 
there is concrete, objective and verifiable evidence of a serious risk of evasion, 
avoidance or abuse, and that those conditions do not go beyond what is necessary 
to attain that objective. That would mean that, in the interest of due tax collection, 
it could be required that the flavours be demonstrably used for flavouring 
foodstuffs or non-alcoholic beverages and that their resale be restricted to that 
end.  
37 In its earlier case-law, the Supreme Administrative Court was motivated by the 
fact that by their nature, flavours are rather easy to abuse [meaning: they can be 
used to flavour products other than those specified in Article 27(1)(e) of Directive 
92/83/EEC]. It suffices to simply mix them into products that do not meet the 
statutory conditions or the Directive, i.e., into alcoholic beverages, which may 
have been produced entirely legally. The statutory condition permitting an 
exemption only in the case of a user, as defined by Paragraph 3 [(1)] (i) of the 
Law on Excise Duties, is a mere reflection of the requirement to reasonably ensure 
proper tax collection or the administrability of the prescribed exemption, in view 
of the specific nature of alcohol flavours. As the Supreme Administrative Court 
stated in its judgment ref. no. 7 Afs 204/2020 – 35 in paragraph 33: ‘the term 
‘abusable’ cannot be understood as meaning that alcohol flavours would have to 
be used for the production of illegal or even health-threatening products. It is only 
misuse in the sense of the application of the exemption from excise duty in cases to 
which the exemption does not apply. […] [T]he exemption applies to cases when 
alcohol flavours are used for flavouring beverages in which ethanol content does 
not exceed 1.2% vol. With the flavouring of entirely legal and taxed beverages in 
which ethanol content exceeds 1.2% vol., the objective of the exemption of ethyl 
alcohol flavours from excise duty would be denied. That use is not prevented by 
any practical obstacle, merely a legal obstacle (the purpose of the exemption).’ 
38 The conditions set by Czech legislation do exclude certain persons from a right to 
a tax exemption (persons other than those who were the first to acquire the 
flavours at the time of their removal from the duty suspension arrangement), even 
if they indeed used the flavours for the set purpose and were able to document it. 
These conditions do, however, still pursue the purpose and objective of the 
Directive. As the Supreme Administrative Court explained in the judgment cited 
above: ‘It is not […] relevant whether there was an abuse of specific items of ethyl 
alcohol flavours in the specific case concerned. Relevant is the character of the 
ethyl alcohol flavours and the ensuing risk of their easy use for a purpose other 
than that for which the exemption of such processed ethyl alcohol was introduced. 
For ethyl alcohol flavours, it does not hold true […] that they would be used, with 
a probability bordering on certainty, solely for the production of foodstuffs and 
AROCO 
 
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beverages with an ethanol content below the de minimis threshold. On the 
contrary, there is a latent risk that without the exertion of any effort, they will also 
be used for purposes to which the exemption from the excise duty does not apply. 
It is this risk that legislation is intended to minimise or, even better, eliminate. 
Hence, it is intended to, for example, prevent a producer of alcoholic beverages 
from purchasing and distributing exempt ethyl alcohol flavours for the production 
of alcohol beverages. For such a producer, the use of exempt ethyl alcohol 
flavourings could be economically very advantageous, as even while keeping a 
reasonable margin for the manufacturer of the ethyl alcohol-based flavours, it 
could still present a cheaper way of flavouring alcoholic beverages.’  
39 On the other hand, the complainant claimed in the proceedings that the use of mini 
packs (bottles with a volume of 20 ml) of flavourings for purposes other than their 
consumption by mixing into foodstuffs in the home, is extremely uneconomical 
and inappropriate in terms of taste. 
40 The Supreme Administrative Court therefore believes that the risk of abuse of 
alcohol flavourings for a purpose other than the declared purpose exists and is not 
negligible. The Court of Justice of the European Union does state in paragraph 66 
of its judgment in Quadrant that ‘flavours are used predominantly as concentrates 
for the preparation of soft drinks, […] are relatively expensive, costing more than 
the cheapest alcohol marketed in the majority of Member States and […] it is 
expensive to purify flavours in order to extract ethyl alcohol therefrom. In the 
light of those characteristics, the Committee on Excise Duties concluded that the 
grant of the exemption provided for in Article 27(1)(e) of Directive 92/83 at the 
time of the production of the flavours would not give rise to any risk of tax 
evasion.’ Extracting ethyl alcohol from flavours is not, however, the only method 
of abuse of ethyl alcohol; on the contrary, the Court of Justice understands the 
term ‘abuse’ more broadly, as it summarised in paragraph 37 of this order. 
41 The conditions set by Czech law can also be viewed in the context of Czech 
society and its relationship to alcohol consumption. 
42 The average consumption of pure alcohol per capita (people older than 15 years) 
in the Czech Republic is the third highest in the world. The World Health 
Organisation has identified 40.7% of Czech men and women over 15 years of age 
as ‘heavy episodic drinkers’, as, in the month before the survey, they drank more 
than 60 grams of pure alcohol at one time (which corresponds to more than three 
0.5 l Pilsner Urquell 12 beers), and 10.1% consume that amount on average on a 
daily basis (‘heavy continuous drinkers’). 1 
43 The situation in the Czech Republic is also illustrated by the 2012 Methanol 
Scandal in which a group of people manufactured cheap spirits out of distillate 
(containing not only ethanol but also the deadly methanol) which they mixed with 
      
1 Global status report on alcohol and health and treatment of substance use disorders. Geneva: 
World Health Organization; 2024 
REQUEST FOR A PRELIMINARY RULING OF 6. 11. 2024 – CASE T-614/24 
 
14  
alcohol flavours. Their distribution to regular shops combined with their low price 
resulted in dozens of human victims. It is desirable to have legal instruments to 
prevent the use of alcohol flavours in ways other than those intended, i.e., for 
flavouring spirits. Otherwise, not only that the tax regime may be abused, for 
example, the use of flavours for flavouring spirits, which would evidently be 
contrary to the purpose pursued by Article 27 (1) (e) of the Directive, but to an 
outright illegal production of alcoholic drinks. 
44 It is, however, questionable whether these facts suffice to make the conditions set 
out in Paragraph 72(1) and in Paragraph 3[(1)](i) of the Law on Excise Duties 
compatible with the requirements of Article 27(1) and case-law of the Court of 
Justice of the European Union and hence, the Supreme Administrative Court has 
proceeded to refer the second question for a preliminary ruling. 
V. Conclusion 
45 The Supreme Administrative Court holds that in its past case-law, the Court of 
Justice of the European Union only dealt with the issue of the interpretation of 
Article 27(1)(e) of Directive 92/83/EEC in part. In the complainant’s case, 
therefore, the issue of the interpretation of the term end use of ethyl alcohol and 
also the question of compliance of the conditions for exemption laid down by 
Czech legislation arose in connection with the importance of taking into account 
the higher risk of abuse of tax exemptions in the Czech Republic.  
46 In particular, the court of appeal on cassation expressed its doubts whether 
Article 27(1)(e) of Directive 92/83/EEC permits Member States to condition an 
exemption from the alcohol tax by already manufactured flavours being actually 
used – and not merely intended for – the flavour of non-alcoholic beverages or 
foodstuffs. If the answer to this question is affirmative, it remains questionable 
whether the conditions set by Czech legislation that make it impossible to grant an 
exemption for flavours that have been resold is compatible with EU law. 
[…]