62009CJ0163_EN
Parties
Grounds
Operative part
Parties
In Case C‑163/09,
REFERENCE for a preliminary ruling under Article 234 EC from the First-tier Tribunal (Tax Chamber) (United Kingdom), made by decision of 24 April 2009, received at the Court on 8 May 2009, in the proceedings
Repertoire Culinaire Ltd
v
The Commissioners for Her Majesty’s Revenue and Customs,
THE COURT (Third Chamber),
composed of K. Lenaerts, President of the Chamber, D. Šváby, R. Silva de Lapuerta (Rapporteur), E. Juhász and J Malenovský, Judges,
Advocate General: J. Kokott,
Registrar: N. Nanchev, Administrator,
having regard to the written procedure and further to the hearing on 10 June 2010,
after considering the observations submitted on behalf of:
– Repertoire Culinaire Ltd, by P. Dewast, avocat, and H. Mercer, Barrister,
– the French Government, by B. Cabouat, acting as Agent,
– the Polish Government, by M. Dowgielewicz, acting as Agent,
– the Portuguese Government, by L. Inez Fernandes, acting as Agent,
– the European Commission, by R. Lyal and A. Sauka, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 15 July 2010,
gives the following
Judgment
Grounds
1. This reference for a preliminary ruling concerns the interpretation of Article 20, first indent, and Article 27(1)(e) and (f) of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages (OJ 1992 L 316, p. 21).
2. The reference has been made in proceedings between Repertoire Culinaire Ltd (‘Repertoire Culinaire’) and the Commissioners for Her Majesty’s Revenue and Customs (‘the Commissioners’) concerning the tax arrangements applicable to the alcohol contained in cooking wine, cooking port and cooking cognac.
Legal context
European Union legislation
3. The third, fourth, eighteenth to twentieth, twenty-second and twenty‑third recitals in the preamble to Directive 92/83 state:
‘Whereas it is important to the proper functioning of the internal market to determine common definitions for all the products concerned;
Whereas it is useful to base such definitions on those set out in the combined nomenclature in force at the date of the adoption of this Directive;
…
Whereas Member States should be permitted to refund the excise duty on alcoholic drinks which have become unfit for consumption;
Whereas it is necessary to lay down at Community level the exemptions which apply to goods which are transported between Member States;
Whereas, however, it is possible to permit Member States an option to apply exemptions tied to end-uses within their territory;
…
Whereas Member States should not be deprived of the means of combating any evasion, avoidance or abuse which may arise in the field of exemptions;
Whereas Member States should be permitted to give effect to the exemptions required by this Directive by way of refund’.
4. Article 19(1) of that directive provides:
‘Member States shall apply an excise duty to ethyl alcohol in accordance with this Directive.’
5. Article 20 of the directive provides:
‘For the purposes of this Directive the term ‘ethyl alcohol’ covers:
– all products with an actual alcoholic strength by volume exceeding 1.2% volume which fall within CN [combined nomenclature] codes 2207 and 2208, even when those products form part of a product which falls within another chapter of the CN,
…’
6. Article 27(1)(e) and (f) of the directive is worded as follows:
‘1. Member States shall exempt the products covered by this Directive from the harmonised 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:
…
(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.;
(f) when used directly or as a constituent of semi-finished products for the production of foodstuffs, filled or otherwise, provided that in each case the alcoholic content does not exceed 8.5 litres of pure alcohol per 100 kg of the product for chocolates, and 5 litres of pure alcohol per 100 kg of the product for other products.’
7. Article 27(6) of Directive 92/83 provides:
‘Member States shall be free to give effect to the exemptions mentioned above by means of a refund of excise duty paid.’
National legislation
8. Section 4 of the Finance Act 1995 provides a mechanism for repayment of excise duty on dutiable alcoholic liquor which has been used in the production or manufacture of food that has an alcoholic content of not more than 5 litres of alcohol per 100 kg of the food.
9. The repayment is made on a claim by certain categories of persons and is not granted for amounts less than GBP 250.
The dispute in the main proceedings and the questions referred for a preliminary ruling
10. Repertoire Culinaire is a food wholesaler.
11. On 10 July 2002, a tractor unit and its trailer were inspected by officers of the Commissioners at the Customs Control Zone, Coquelles (France).
12. As regards the load carried by that vehicle, the driver of the vehicle produced a document showing 11 pallets of cooking wine and designating Repertoire Culinaire as the consignee.
13. According to the findings of the officer who carried out the inspection of that load, it consisted of 2 800 litres of white wine with an alcoholic strength of 11% by volume, 2 800 litres of red wine with an alcoholic strength of 11% by volume, 160 litres of port with an alcoholic strength of 19% by volume and 80 litres of cognac with an alcoholic strength of 40% by volume.
14. Those goods were detained on the ground that there was no evidence that the excise duty on them had been accounted for to the relevant authorities of the United Kingdom of Great Britain and Northern Ireland.
15. Enquiries carried out by the National Discreditation Team (a national detection team) established the presence of ‘ingredients’ in the alcoholic beverages detained.
16. Following those enquiries, on 16 July 2002 the goods in question were seized as liable to forfeiture.
17. Repertoire Culinaire was notified of that seizure by letter of 2 August 2002 and on the same day requested restoration of its goods.
18. By letter of 28 August 2002, the Commissioners refused that request.
19. Repertoire Culinaire sought an administrative review of that refusal.
20. By letter of 17 October 2002, the Commissioners notified Repertoire Culinaire that, on review, the decision not to restore to it the goods in question had been upheld on the ground that they were liable to United Kingdom excise duty.
21. On 4 November 2002, Repertoire Culinaire lodged an appeal against the decision of 17 October 2002 before the national court.
22. In those circumstances the First-tier Tribunal (Tax Chamber) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Are cooking wine and cooking port subject to excise duty under Directive [92/83] in the Member State of importation on the grounds that they are within the definition of ‘ethyl alcohol’ under the first indent of Article 20 of [that directive]?
(2) Is it consistent with the Member State’s obligation to give effect to the exemption contained in Article 27(1)(f) of Directive 92/83, when read with Article 27(6), and/or with Article 28 EC and/or with the direct effect of those obligations and/or with the principles of equal treatment and proportionality to restrict the exemption for cooking wine, cooking port and cooking cognac to cases where alcoholic beverages have been used as an ingredient and to restrict the applicants for exemption to those persons who have used the alcoholic beverages as an ingredient in products and/or those persons who carry on business as wholesalers of such products and/or they produced or manufactured such products for the purposes of that business and subject to the further conditions that claims be made within an overall period of four months from the payment of duty and that the amount of the repayment be not less than [GBP] 250?
(3) Should the cooking wine and cooking port, if liable to duty under the first indent of Article 20 of Directive 92/83, and/or the cooking cognac, subject to the present appeal, be treated as exempt from excise duty at the point of manufacture under Article 27(1)(f) [of Directive 92/83 or, alternatively, Article 27(1)(e) of Directive 92/83]?
(4) In the light of Articles 10 [EC] and 28 EC, what effect, if any, does it have on Member States’ obligations under [Articles 20 and 27(1)(f) or, alternatively, Article 27(1)(e) of] Directive 92/83 if cooking wine, cooking port and cooking cognac have been released by the Member State of manufacture from the excise movement system under [Council] Directive [92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products (OJ 1992 L 76, p. 1)] into free movement within the European Union?’
Consideration of the questions referred
The first question
23. By its first question the national court asks, in essence, whether Article 20, first indent, of Directive 92/83 must be interpreted as meaning that the definition of ‘ethyl alcohol’ in that provision applies to cooking wine and cooking port.
24. It must be observed that cooking wine and cooking port, which, as edible preparations, fall within chapter 21 of the Combined Nomenclature annexed to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1), in the version resulting from Commission Regulation (EEC) No 2587/91 of 26 July 1991 (OJ 1991 L 259, p. 1), contain ethyl alcohol falling within heading 2208 of that nomenclature, and that since that alcohol has an alcoholic strength exceeding 1.2% by volume, it falls within the scope of the first indent of Article 20 of Directive 92/83 (see Case C-458/06 Gourmet Classic
[2008] ECR I-4207, paragraphs 35 and 36).
25. In that regard, there is no doubt that the cooking wine and cooking port at issue in the main proceedings have an alcoholic strength exceeding 1.2% by volume and that they are prepared from alcoholic beverages subject to the harmonised excise duty under that directive, that is to say, wine and port.
26. In addition, it must be observed that, since the first indent of Article 20 of Directive 92/83 applies even when the products covered by that provision form part of a product which falls within another chapter of the combined nomenclature annexed to Regulation No 2658/87, as amended by Regulation No 2587/91, the fact that cooking wine and cooking port are, as such, regarded as edible preparations falling within chapter 21 of that nomenclature does not affect the fact that Article 20 of Directive 92/83 is applicable to the ethyl alcohol contained in them (see Gourmet Classic, paragraphs 36 to 38).
27. The same is true of the fact that the cooking wine and cooking port are unsuitable for consumption as beverages.
28. It follows, in particular, from Article 27(1) of Directive 92/83, read in conjunction with the eighteenth and twentieth recitals in the preamble thereto, that such facts are of relevance only in relation to the exemption of products subject to the harmonised excise duty.
29. In addition, it must be noted that, as is apparent from its title, Directive 92/83 seeks to harmonise in a general manner the structures of excise duties on both alcoholic beverages and alcohol.
30. In those circumstances, the answer to the first question is that Article 20, first indent, of Directive 92/83 must be interpreted as meaning that the definition of ‘ethyl alcohol’ in that provision applies to cooking wine and cooking port.
The third question
31. By its third questi on the national court asks, in essence, whether the cooking wine, cooking port and cooking cognac at issue in the main proceedings must, if liable to the harmonised duty under Directive 92/83, be exempted from that duty as products used for the production of flavours, within the meaning of Article 27(1)(e) of that directive, or as products used for the production of foodstuffs, within the meaning of Article 27(1)(f).
32. In that connection, although it cannot be ruled out that cooking wine, cooking port and cooking cognac may be used for the production of flavours for the preparation of foodstuffs and non-alcoholic beverages, within the meaning of Article 27(1)(e) of Directive 92/83, that is not the use for which the products in the main proceedings are intended.
33. Thus, according to the order for reference, the cooking wine, cooking port and cooking cognac at issue in the main proceedings are used not for the production of flavours, but for the production of culinary dishes, as ingredients incorporated therein.
34. Consequently, unless the products at issue in the main proceedings are used for the production of flavours for the preparation of foodstuffs and non-alcoholic beverages, as a rule any exemption will be under Article 27(1)(f) of Directive 92/83.
35. In that context, it must be recalled that the Court has already held that the relevant provision for the exemption of cooking wine from harmonised excise duty is, as a rule, Article 27(1)(f) of Directive 92/83 ( Gourmet Classic, paragraph 39).
36. In those circumstances, the answer to the third question is that, in circumstances such as those at issue in the main proceedings, an exemption from the harmonised excise duty for cooking wine, cooking port and cooking cognac falls under Article 27(1)(f) of Directive 92/83.
The fourth question
37. By its fourth question the national court asks, in essence, whether the fact that products such as the cooking wine, cooking port and cooking cognac at issue in the main proceedings have been treated as not being subject to excise duty or as being exempted from that duty under Directive 92/83 and released for consumption in the Member State of manufacture has an effect on any application of the provisions of that directive to those products by another Member State in which the products are intended to be put on the market.
38. In that connection, it should be noted that, in accordance with the first and fourth recitals in the preamble to Directive 92/12, the establishment and functioning of the internal market require the free movement of goods, including those subject to excise duties, and that the chargeability of excise duties should be identical in all the Member States.
39. In addition, it should be recalled that, according to the third recital in the preamble to Directive 92/83, it is important to the proper functioning of the internal market to determine common definitions for all the products concerned and that, according to the nineteenth recital in the preamble to that directive, it is necessary to lay down at the European Union level the exemptions which apply to goods which are transported between Member States
40. It follows that, in order to ensure the proper functioning of the internal market and to ensure the free movement of goods, the products subject to excise duty must be determined, and the exemptions applied, in a uniform manner within the European Union, unless otherwise provided.
41. The uniform application of the provisions of Directive 92/83 requires that the imposition or not of excise duty on a product and the exemption from duty of a product in a Member State must, as a rule, be recognised by all the other Member States.
42. Any other interpretation would compromise the attainment of the objective of Directive 92/83 and would be likely to hinder the free movement of goods.
43. However, in that context, a Member State cannot be bound by an incorrect application of the provisions of Directive 92/83 by another Member State nor denied the possibility, recognised by the twenty‑second recital in the preamble thereto and by Article 27 of that directive, of adopting measures to combat any evasion, avoidance or abuse which may arise in the field of exemptions and to ensure the correct and straightforward application of such exemptions.
44. Nevertheless, the finding that such measures have been applied incorrectly or the adoption of such measures must be based on concrete, objective and verifiable evidence (see, to that effect, Case C‑482/98 Italy
v Commission
[2000] ECR I‑10861, paragraphs 51 and 52).
45. In those circumstances, the answer to the fourth question is that, if products such as the cooking wine, cooking port and cooking cognac at issue in the main proceedings, which have been treated as not being subject to excise duty or as being exempted from that duty under Directive 92/83 and released for consumption in the Member State of manufacture, are intended to be put on the market in another Member State, the latter must treat those products in the same way in its territory, unless there is concrete, objective and verifiable evidence that the first Member State has failed to apply the provisions of that directive correctly or that, in accordance with Article 27(1) thereof, it is justifiable to adopt measures to combat any evasion, avoidance or abuse which may arise in the field of exemptions and to ensure the correct and straightforward application of such exemptions.
The second question
46. By its second question, the national court asks, in essence, whether, in the case of products such as the cooking wine, cooking port and cooking cognac at issue in the main proceedings, Article 27(1)(f) of Directive 92/83 must be interpreted as meaning that the exemption laid down in that provision may, first, be restricted to those persons who have used those products as an ingredient in the production of foodstuffs and/or to those persons who carry on business as wholesalers of such foodstuffs and/or produced or manufactured such foodstuffs for the purposes of that business and, second, be made subject to the dual condition that a claim for repayment be made within four months from the payment of excise duty and that the amount of the repayment be not less than GBP 250.
47. In that connection, it must be borne in mind at the outset that, in accordance with Article 27(6) of Directive 92/83, read in conjunction with the eighteenth and twenty-third recitals in the preamble to that directive, the Member States are to be free to give effect to the exemptions under that directive by means of a refund of excise duty paid.
48. Furthermore, it must be recalled that the objective of the exemptions contained in Directive 92/83 is, in particular, to neutralise the impact of excise duties on alcohol used as an intermediate product in other commercial or industrial products (see Italy
v Commission, paragraph 4, and Case C‑63/06 Profisa
[2007] ECR I‑3239, paragraph 17).
49. Thus, it follows from Article 27(1)(f) of Directive 92/83, read in conjunction with the twentieth recital in the preamble to that directive, that the application of the exemption under that provision by a Member State depends on the end-use of the products in question.
50. Similarly, Article 27(1), read in conjunction with the twenty-second recital in the preamble to Directive 92/83, provides that the Member States may lay down conditions for the purpose of ensuring the correct and straightforward application of the exemptions under that provision and of preventing any evasion, avoidance or abuse.
51. In that context, it must also be recalled that the Court has held, first, that the exemption of products covered by Article 27(1) of Directive 92/83 is the rule and refusal is the exception, and, second, that the power granted to Member States by that provision to lay down conditions for the purpose of ‘ensuring the correct and straightforward application of such exemptions and of preventing any evasion, avoidance or abuse’ cannot detract from the unconditional nature of the obligation imposed by that provision to grant exemption (see Italy
v Commission, paragraph 50, and Profisa, paragraph 18).
52. It follows that, 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 (see, to that effect, Italy
v Commission, paragraph 52) 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.
53. Consequently, although the Member States may give effect to the exemption under Article 27(1)(f) of Directive 92/83 by means of a refund of excise duty paid, depending on how the products in question are used, they cannot, on the other hand, make the application of that exemption conditional on compliance with conditions which are not proven, by concrete, objective and verifiable evidence, to be necessary to ensure the correct and straightforward application of such an exemption and to prevent any evasion, avoidance or abuse.
54. The evidence submitted to the Court seems to indicate that the conditions laid down by the national legislation at issue in the main proceedings, that is to say, a restriction of the persons authorised to make a claim for recovery, a four-month period for bringing such a claim and the establishment of a minimum amount of repayment, are not necessary either to ensure the correct and straightforward application of the exemption under Article 27(1)(f) of Directive 92/83 or to prevent any evasion, avoidance or abuse.
55. However, it is for the national court, before which the dispute in the main proceedings has been brought and which must assume responsibility for its subsequent judicial decision, to ascertain, on the basis of concrete, objective and verifiable evidence in its possession, whether that is the case.
56. In those circumstances, the answer to the second question is that Article 27(1)(f) of Directive 92/83 must be interpreted as meaning that the exemption contained in that provision may be made conditional on compliance with conditions such as those laid down by the national legislation at issue in the main proceedings, that is to say, the restriction of the persons authorised to make a claim for recovery, a four-month period for bringing such a claim and the establishment of a minimum amount of repayment, only if it is apparent from concrete, objective and verifiable evidence that those conditions are necessary to ensure the correct and straightforward application of the exemption in question and to prevent any evasion, avoidance or abuse. It is for the national court to ascertain whether that is true of the conditions laid down by that legislation.
Costs
57. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
Operative part
On those grounds, the Court (Third Chamber) hereby rules:
1. Article 20, first indent, of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages must be interpreted as meaning that the definition of ‘ethyl alcohol’ in that provision applies to cooking wine and cooking port.
2. In circumstances such as those at issue in the main proceedings, an exemption from the harmonised excise duty for cooking wine, cooking port and cooking cognac falls under Article 27(1)(f) of Directive 92/83.
3. If products such as the cooking wine, cooking port and cooking cognac at issue in the main proceedings, which have been treated as not being subject to excise duty or as being exempted from that duty under Directive 92/83 and released for consumption in the Member State of manufacture, are intended to be put on the market in another Member State, the latter must treat those products in the same way in its territory, unless there is concrete, objective and verifiable evidence that the first Member State has failed to apply the provisions of that directive correctly or that, in accordance with Article 27(1) thereof, it is justifiable to adopt measures to combat any evasion, avoidance or abuse which may arise in the field of exemptions and to ensure the correct and straightforward application of such exemptions.
4. Article 27(1)(f) of Directive 92/83 must be interpreted as meaning that the exemption contained in that provision may be made conditional on compliance with conditions such as those laid down by the national legislation at issue in the main proceedings, that is to say, the restriction of the persons authorised to make a claim for recovery, a four-month period for bringing such a claim and the establishment of a minimum amount of repayment, only if it is apparent from concrete, objective and verifiable evidence that those conditions are necessary to ensure the correct and straightforward application of the exemption in question and to prevent any evasion, avoidance or abuse. It is for the national court to ascertain whether that is true of the conditions laid down by that legislation.