62010CJ0503_EN
Parties
Grounds
Operative part
Parties
In Case C‑503/10,
REFERENCE for a preliminary ruling under Article 267 TFEU from the Varhoven administrativen sad (Bulgaria), made by decision of 24 September 2010, received at the Court on 20 October 2010, in the proceedings
Evroetil AD
v
Direktor na Agentsia ‘Mitnitsi’,
THE COURT (Eighth Chamber),
composed of K. Schiemann, acting President of the Eighth Chamber, L. Bay Larsen and E. Jarašiūnas (Rapporteur), Judges,
Advocate General: J. Mazák,
Registrar: R. Şereş, Administrator,
having regard to the written procedure and further to the hearing on 14 September 2011,
after considering the observations submitted on behalf of:
– Evroetil AD, by I. Raychinova, advokat,
– the Direktor na Agentsia ‘Mitnitsi’, by V. Tanov and S. Valkova, N. Yotsova and S. Yordanova, acting as Agents,
– the Bulgarian Government, by T. Ivanov and E. Petranova, acting as Agents,
– the Greek Government, by K. Paraskevopoulou and Z. Chatzipavlou, acting as Agents,
– the European Commission, by W. Mölls, K. Herrmann and S. Petrova, acting as Agents,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following
Judgment
Grounds
1. This reference for a preliminary ruling concerns the interpretation of Article 2(2)(a) of Directive 2003/30/EC of the European Parliament and of the Council of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport (OJ 2003 L 123, p. 42), of the Combined Nomenclature (CN) of the Common Customs Tariff in Annex I 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), as amended by Commission Regulation (EEC) No 2587/91 of 26 July 1991 (OJ 1991 L 259, p. 1), of Article 2(1) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ 2003 L 283, p. 51), and of the first indent of Article 20 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. That reference was made in the context of proceedings involving Evroetil AD (‘Evroetil’) and the Direktor na Agentsia ‘Mitnitsi’ (Director, Customs Agency) (‘the Direktor’) concerning the lawfulness of an order for recovery of excise duties relating to November and December 2006 and also January, March and May 2007.
Legal context
European Union law
Directive 92/83 and Regulation (EC) No 3199/93
3. Article 19(1) of Directive 92/83 provides:
‘Member States shall apply an excise duty to ethyl alcohol in accordance with this Directive.’
4. The first indent of Article 20 of Directive 92/83 states:
‘For the purposes of this Directive the term “ethyl alcohol” covers:
– all products with an actual alcoholic strength by volume exceeding 1.2% which fall within CN codes 2207 and 2208, even when those products form part of a product which falls within another chapter of the CN, …’
5. Article 26 of Directive 92/83 states that references to CN codes are to be construed as being to the version of the CN in force when that directive was adopted, that is, as resulting from Regulation No 2587/91.
6. Article 27(1) of Directive 92/83 provides:
‘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:
(a) when distributed in the form of alcohol which has been completely denatured in accordance with the requirements of any Member State, such requirements having been duly notified and accepted …;
(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;
...’
7. Commission Regulation (EC) No 3199/93 of 22 November 1993 on the mutual recognition of procedures for the complete denaturing of alcohol for the purposes of exemption from excise duty (OJ 1993 L 288, p. 12) states the denaturants which are authorised in each Member State for the purposes of completely denaturing alcohol in accordance with Article 27(1)(a) of Directive 92/83. The list of denaturants authorised for the Republic of Bulgaria was introduced into Regulation No 3199/93 by Commission Regulation (EC) No 67/2008 of 25 January 2008 (OJ 2008 L 23, p. 13), which entered into force on 29 January 2008.
The CN
8. The CN, established by Regulation No 2658/87, is based on the international Harmonised Commodity Description and Coding System (‘the HS’) drawn up by the Customs Cooperation Council, now the World Customs Organisation (‘the WCO’), adopted by the International Convention concluded in Brussels on 14 June 1983 and approved on behalf of the European Economic Community by Council Decision 87/369/EEC of 7 April 1987 concerning the conclusion of the International Convention on the Harmonised Commodity Description and Coding System and of the Protocol of Amendment thereto (OJ 1987 L 198, p. 1). The CN, in the version thereof resulting from Regulation No 2587/91, includes in Part II, Section IV, chapter 22, entitled ‘Beverages, spirits and vinegar’. In that chapter, heading 2207 reads as follows:
‘2207	Undenatured ethyl alcohol of an alcoholic strength by volume of 80% or higher; ethyl alcohol and other spirits, denatured, of any strength:
2207 10 00	– Undenatured ethyl alcohol of an alcoholic strength by volume of 80% or higher
2207 20 00 – Ethyl alcohol and other spirits, denatured, of any strength’.
Directive 2003/30
9. Recitals 4 to 7, 10, 14 and 23 in the preamble to Directive 2003/30 state the following:
‘(4) The transport sector accounts for more than 30% of final energy consumption in the Community and is expanding, a trend which is bound to increase, along with carbon dioxide emissions and this expansion will be greater in percentage terms in the candidate countries following their accession to the European Union.
(5) … From an ecological point of view, the [Commission White Paper “European transport policy for 2010: time to decide”] … calls for dependence on oil (currently 98%) in the transport sector to be reduced by using alternative fuels such as biofuels.
(6) Greater use of biofuels for transport forms a part of the package of measures needed to comply with the Kyoto Protocol, and of any policy package to meet further commitments in this respect.
(7) Increased use of biofuels for transport … is one of the tools by which the Community can reduce its dependence on imported energy and influence the fuel market for transport …
...
(10) Promoting the use of biofuels in transport constitutes a step towards a wider application of biomass which will enable biofuel to be more extensively developed in the future …
...
(14) Bioethanol and biodiesel, when used for vehicles in pure form or as a blend, should comply with the quality standards laid down to ensure optimum engine performance. …
(23) Since the objective of the proposed action, namely the introduction of general principles providing for a minimum percentage of biofuels to be marketed and distributed, cannot be achieved sufficiently by the Member States …’
10. Article 1 of Directive 2003/30 provides:
‘This Directive aims at promoting the use of biofuels or other renewable fuels to replace diesel or petrol for transport purposes in each Member State, with a view to contributing to objectives such as meeting climate change commitments, environmentally friendly security of supply and promoting renewable energy sources.’
11. Article 2 of Directive 2000/30 provides:
‘1. For the purpose of this Directive, the following definitions shall apply:
(a) “biofuels” means liquid or gaseous fuel for transport produced from biomass;
...
2. At least the products listed below shall be considered biofuels:
(a) “bioethanol”: ethanol produced from biomass and/or the biodegradable fraction of waste, to be used as biofuel;
...’
12. According to Article 3(1) of that same directive:
‘(a) Member States should ensure that a minimum proportion of biofuels and other renewable fuels is placed on their markets, and, to that effect, shall set national indicative targets.
...’
Directive 2003/96
13. Recital 27 in the preamble to Directive 2003/96 states:
‘This Directive shall be without prejudice to the application of the relevant provisions of 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 1991 L 76, p. 1], and … Directive 92/83/EEC …, when the product intended for use, offered for sale or used as motor fuel or fuel additive is ethyl alcohol as defined in Directive 92/83/EEC.’
14. Article 1 of Directive 2003/96 provides that ‘Member States shall impose taxation on energy products and electricity in accordance with this Directive’. Article 2(1) lists the products considered to be ‘energy products’ for the purposes of that directive. Those products are identified by the CN codes within which they fall, which must, according to Article 2(5), cover those falling within the CN as it results from Commission Regulation (EC) No 2031/2001 of 6 August 2001, amending Annex I to Regulation No 2658/87 (OJ 2001 L 279, p. 1), in which the wording of heading 2207 is identical to that in Regulation No 2587/91.
15. The list in Article 2(1) of Directive 2003/96 does not include CN code 2207, CN code 2207 10 00 or CN code 2207 20 00.
16. Article 2(3) of that directive provides:
‘When intended for use, offered for sale or used as motor fuel or heating fuel, energy products other than those for which a level of taxation is specified in this Directive shall be taxed according to use, at the rate for the equivalent heating fuel or motor fuel.
In addition to the taxable products listed in paragraph 1, any product intended for use, offered for sale or used as motor fuel, or as an additive or extender in motor fuels, shall be taxed at the rate for the equivalent motor fuel.
...’
17. Article 16(1) of that directive provides, in the third and fourth indents:
‘Member States may … apply an exemption or a reduced rate of taxation under fiscal control on the taxable products referred to in Article 2 where such products are made up of, or contain, one or more of the following products:
...
– products falling within CN codes 2207 20 00 and 2905 11 00 which are not of synthetic origin;
– products produced from biomass, including products falling within CN codes 4401 and 4402.’
National law
18. The Law on excise duties and tax warehouses (Zakon za aktsizite i danachnite skladove, DV No 91, of 15 November 2005), in the version applicable to the tax periods at issue (DV No 81, of 6 October 2006, and No 105, of 22 December 2006) (‘the Law on excise duties’), provides in Article 2 that the following are subject to excise duty:
‘1. alcohol and alcoholic drinks;
…
3. energy products and electrical energy;
…’
19. Article 4 of the Law on excise duties provides:
‘1. “Excise goods” are the goods set out in Article 2.
...
5. “CN codes” are the codes of the [CN] in Annex I to [Regulation No 2658/87]. The CN codes of the [CN] in force on 31 December 1992 are applicable to alcohol and alcoholic drinks and the CN codes of the Combined Nomenclature in force on 1 January 2002 are applicable to energy products and electrical energy.
...
12. “Denaturing” is a process by which poisonous ingredients (additives), or ingredients which are unpleasant to the taste or smell, are added to ethyl alcohol, rendering it dangerous to health or unsuitable for drinking.
...
23. “Bioethanol” is ethanol which is produced from biomass and/or from the biodegradeable part of waste and is intended for use as biofuel.
...’
20. Article 9 of the Law on excise duties provides:
‘“Ethyl alcohol” (alcohol) is any product:
1. falling within CN codes 2207 and 2208 and whose alcoholic strength by volume is more than 1.2%, including where that product is part of a product which comes under another chapter of the [CN] of the Republic of Bulgaria;
...’
21. Article 13 of the Law on excise duties contains a list of products considered to be ‘energy products’ for the purposes of that law. That list is, in essence, identical to the one in Article 2(1) of Directive 2003/96.
22. Article 31(5) of the Law on excise duties fixes the rate of excise duty for ethyl alcohol at BGN 1 100 per hectolitre of pure alcohol. Article 32(1)(7) of that law fixes the rate of excise duty for fuels at BGN 0 per 1 000 litres for bioethanol within CN code 2207 20 00.
23. Article 35(1) and (2) of the Law on excise duties provides:
‘1. Energy products under Article 13, which are intended for use, offered for sale or used as motor fuel or heating fuel, and for which no rate of excise duty is set out in Article 32(1) and Article 33(1), shall be taxed at the rate for the equivalent heating fuel or motor fuel.
2. In addition to energy products under Article 13 and bioethanol, any product intended for use, offered for sale or used as motor fuel, or as an additive or extender in motor fuels, shall be taxed at a rate for the equivalent motor fuel set out in Article 32(1).’
The dispute in the main proceedings and the questions referred for a preliminary ruling
24. Evroetil is an authorised warehousekeeper for the management of a tax warehouse and is equipped for the production of alcohol and bioethanol. A tax audit was carried out on the company for the taxable periods from 1 July 2006 to 10 May 2007, during which it had released for consumption 124 346.05 litres of a product declared as bioethanol under CN code 2207 20 00 and with an excise duty of BGN 0. Subsequently 111 425 litres of that product had been returned to Evroetil and was at the warehouse when the inspection was carried out. At the purchaser’s premises, 10 555.55 litres was entered in the books as bioethanol and sold by that trader as fuel mixed with petrol.
25. In the context of the tax audit, the customs authorities took a number of test samples of the product at issue in the main proceedings. An analysis showed that it had an alcoholic strength of over 98.5% by volume, contained ester (ethyl acetate), higher alcohols, aldehyde and ethyl alcohol and had not been denatured. This last point is not challenged. The customs authorities concluded that that product ought to have been declared under CN code 2207 10 00 as undenatured ethyl alcohol and that it should therefore have been subject to a rate of BGN 1 100 per hectolitre of pure alcohol. The customs authorities then assessed additional excise duty liability in the amount of BGN 1 397 973.17 plus interest which, as at 5 November 2007, amounted to BGN 148 897.89.
26. As the excise liabilities and interest due for November and December 2006 and also January, March and May 2007, totalling BGN 1 372 000.41 in excise duties and BGN 144 292.54 in interest, were upheld in an action brought before the Administrativen sad gr. Ruse (Administrative Court, Ruse), Evroetil appealed against that judgment before the Varhoven administrativen sad (Supreme Administrative Court).
27. That court states indicates that, in the action before the Administrativen sad gr. Ruse, an expert concluded, in essence, that the product at issue in the main proceedings was not fit for human consumption on the ground that it was carcinogenic, that it was liable to be used as a biofuel, as its composition complied with the requirements laid down in the technical specifications drafted by Evroetil for bioethanol intended for use as a biofuel, that it complied with the requirements of European standard prEN 15376 for bioethanol as fuel and that it had been produced using a technology other than that used for the production of ethyl alcohol. The referring court indicates that it accepts those conclusions.
28. Evroetil has submitted before that court that the product at issue in the main proceedings should be subject to an excise duty rate of 0. It states, inter alia, that the denaturing of the product makes it unsuitable for use as fuel. It adds that it should not have to pay any excise duty for the portion of the product returned by the purchasers.
29. The Direktor argues that the product at issue in the main proceedings is ethyl alcohol which was not denatured in accordance with Regulation No 3199/93 and that, consequently, it comes under CN code 2207 10 00 and must be subject to excise duty. In the Direktor’s submission, the fact that the product is unsuitable for human consumption is not relevant in that regard. Moreover, the return of part of the product to Evroetil’s warehouse does not relieve it of the obligation to pay excise duties.
30. The referring court indicates that making the product at issue in the main proceedings subject to excise duty and the amount potentially owing pursuant thereto is directly contingent on its classification in the CN and thus on the nature of that product. It states that it has encountered difficulties in determining, on the one hand, whether the product is bioethanol for the purposes of Directive 2003/30, considering inter alia that that directive refers to use as biofuel and part of the product at issue in the main proceedings was returned to Evroetil’s warehouse and, on the other, whether bioethanol may be considered to be an energy product, since such a classification would affect how it is treated for tax purposes under national law. The referring court also doubts whether it is possible to consider bioethanol to be an alcohol, given that bioethanol is not referred to in the CN.
31. In those circumstances the Varhoven administrativen sad decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling, adding that they concern only the excise liabilities relating to the tax periods subsequent to the accession of the Republic of Bulgaria to the European Union, namely the months of January, March and May 2007:
‘(1) Is Article 2(2)(a) of [Directive 2003/30] to be interpreted as meaning that the definition of bioethanol refers to products such as that in question (covers products such as that in question), which has the following characteristics and qualities:
– it is produced from biomass,
– the production takes place by means of a special technology, which is described in the technical specifications for the production of bioethanol drafted by [Evroetil], and which differs from the technology for the production of agricultural ethyl alcohol according to the technical specifications drafted by that producer,
– it contains more than 98.5% alcohol and the following substances, which render it unsuitable for consumption: higher alcohols – 714.49 to 8 311 mg/dm³; aldehyde – 238.16 to 411 mg/dm³; ester (ethyl acetate) – 1 014 to 8 929 mg/dm³,
– it complies with the requirements of the European standard prEN 15376 for bioethanol as fuel,
– it is intended for use as fuel and is, by its addition to A95-petrol, actually used as fuel and sold at petrol stations,
– it is not denatured in a special denaturing procedure[?]
(2) Is Article 2(2)(a) of Directive 2003/30 to be interpreted as meaning that the product in question can be classified as bioethanol only where it is actually used as biofuel, or is it sufficient that it is intended for use as biofuel and/or is actually suitable for use as biofuel?
(3) If, on the basis of the answers to questions 1 and 2, it is to be assumed that the product in question or a corresponding part thereof is bioethanol, under which heading of the [CN] is the product in question then to be classified?
(3.1) Are the provisions of Chapter 22 of the CN and specifically heading 2207 to be interpreted as meaning that they cover bioethanol?
(3.2) If the answer to question 3.1 is in the affirmative, should then the classification of bioethanol and specifically the product in question take account of whether the product has been denatured (in accordance with the procedure set out in [Regulation No 3199/93] or in accordance with other admissible procedures)?
(3.3) If the answer to question 3.2 is in the affirmative, are then the provisions of the CN concerning heading 2207 to be interpreted as meaning that only denatured bioethanol is to be classified under code 2207 20 [00] of the CN?
(3.4) If the answer to question 3.3 is in the affirmative, are then the provisions of the CN concerning heading 2207 to be interpreted as meaning that bioethanol that has not been denatured is to be classified under code 2207 10 [00] of the CN?
(3.5) If the answer to question 3.1 is in the affirmative and the answer to question 3.2 is in the negative, under which of the two subheadings – 2207 10 [00] or 2207 20 [00] – is then the product in question to be classified?
(3.6) If the answer to question 3.1 is in the negative, is bioethanol then to be classified under one of the CN codes stated in Article 2(1) of [Directive 2003/96], and under which one?
4. If, on the basis of the answers to questions 1 and 2, it is to be assumed that the product in question or a corresponding part thereof is not bioethanol, is then the product in question, which has the characteristics and qualities stated in question 1, to be classified as ethyl alcohol within the meaning of the first indent of Article 20(1) of [Directive 92/83]?’
The questions referred for a preliminary ruling
Admissibility
32. Evroetil disputes the admissibility of all of the questions referred, which relate to facts and are in the form of a consultation. Moreover, the provisions for which interpretation is sought in the first, second and fourth questions are clear and the answer which might be given to the third question does not help to resolve the dispute in the main proceedings.
33. It should be borne in mind as a preliminary point that, in the context of the cooperation between the Court of Justice and the national courts provided for by Article 267 TFEU, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (Case C‑217/05 Confederación Española de Empresarios de Estaciones de Servicio
[2006] ECR I‑11987, paragraph 16 and case-law cited).
34. Where questions submitted by national courts concern the interpretation of a provision of EU law, the Court of Justice is bound, in principle, to give a ruling unless it is obvious that the request for a preliminary ruling is in reality designed to induce the Court to give a ruling by means of a fictitious dispute, or to deliver advisory opinions on general or hypothetical questions, or that the interpretation of EU law requested bears no relation to the actual facts of the main action or its purpose, or that the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it ( Confederación Española de Empresarios de Estaciones de Servicio, paragraph 17 and case-law cited).
35. That is not the case with the present reference for a preliminary ruling, however. It is clear from the order for reference that the referring court is of the view that it needs the answers to the questions referred, which concern the interpretation of a number of provisions of EU law, in order to determine the tax treatment to be given under EU law to a product such as that described in the first question and thus resolve the dispute before it.
36.
Second, the alleged clarity of the answers to the questions referred in no way prevents a national court from making a reference for a preliminary ruling to this Court and does not have the effect of depriving this Court of jurisdiction to rule on such questions (see, to that effect, Joined Cases C‑428/06 to C‑434/06 UGT-Rioja and Others
[2008] ECR I‑6747, paragraphs 42 and 43 and case-law cited).
37. It follows that answers must be provided to the questions referred.
Consideration of the first and second questions
38. By its first and second questions, which it is appropriate to consider together, the referring court asks, in essence, whether the definition of bioethanol in Article 2(2)(a) of Directive 2003/30 must be interpreted as meaning, first, that it encompasses a product such as that at issue in the main proceedings, which is obtained from biomass by means of a technology which differs from the technology used for the production of agricultural ethyl alcohol, which contains more than 98.5% ethyl alcohol, which contains substances rendering it unsuitable for consumption, which complies with the requirements of European standard prEN 15376 for bioethanol as fuel and which has not been denatured in a special denaturing procedure and, second, that it requires actual use of that product as biofuel.
39. The Direktor, the Bulgarian and Greek Governments and the European Commission consider that the definition in that provision includes such a product. The Direktor and the Bulgarian Government further submit that it must actually be used as fuel and the Greek Government considers that the concept of ‘bioethanol’ for the purposes of Directive 2003/30 cannot be interpreted independently of the intended use of that product. On this last point, the Commission submitted at the hearing that the decisive criterion for the classification of a product as ‘bioethanol’ for the purposes of that provision is actual use of that product as biofuel, whilst emphasising, when questioned on the point, that Directive 2003/30 focuses on the ability of that product to be used as biofuel.
40. Under Article 2(2)(a) of Directive 2003/30, bioethanol is an ethanol or, in other words, an ethyl alcohol, produced inter alia from biomass and used as biofuel. Under Article 2(1)(a), a biofuel is a liquid or gaseous fuel for transport produced from biomass. It follows that a product with an ethyl alcohol content of over 98.5% obtained from biomass meets the definition of bioethanol in Article 2(2)(a) of that directive if it is ‘used as biofuel’.
41. Regarding the latter condition, and as observed by the Bulgarian Government, a comparative examination of the different language versions of that provision shows that certain versions, such as the Czech and French versions, give the impression that actual use as a biofuel is required, whilst other versions, such as the Italian and Lithuanian versions, seem to indicate that the mere fact that the product is intended to be used as biofuel is sufficient, and yet other language versions, such as the Spanish and Polish versions, may be construed either way.
42. According to settled case-law, the need for uniform application and therefore interpretation of the various language versions of a provision of EU law requires, where there is divergence between the various language versions of an EU legislative text, that the provision in question be interpreted by reference to the purpose and general scheme of the rules of which it forms part (Case C‑72/95 Kraaijeveld and Others [1996] ECR I‑5403, paragraph 28, and Case C‑63/06 Profisa [2007] ECR I‑3239, paragraph 14).
43. In that regard, it is apparent from Article 2(2) of Directive 2003/30 that bioethanol, which is described in Article 2(2)(a), is merely an example of a product which may be considered to be a biofuel for the purposes of that directive. As stated above in paragraph 40 of this judgment, that latter concept refers specifically to a fuel produced from biomass and used for transport. It is also apparent inter alia from recitals 4 to 7, 10 and 14 in the preamble to Directive 2003/30, as well as the title and Article 1 thereof, that its object is to promote the use of biofuels or other renewable fuels in transport, in order to replace the diesel or petrol currently used.
44. To interpret the concept of ‘bioethanol’ within the meaning of Article 2(2)(a) of Directive 2003/30 as including the mere ability of a given product to be used as biofuel would run counter to that object. On the other hand, to consider that a product comes within that concept only if it is actually used as biofuel would make that classification contingent on subsequent factual checks which would make it difficult to apply in practice. It should also be noted that, according to recital 23 in the preamble to and Article 3(1)(a) of Directive 2003/30, the use of biofuels and other renewable fuels as replacement fuels for transport should be encouraged through their being placed on the markets.
45. It follows that ethanol produced from biomass is a bioethanol within the meaning of Article 2(2)(a) of Directive 2003/30 only if it is offered for sale as a biofuel for transport.
46. Moreover, since that provision does not lay down any other condition relating to the production technology used, the substances in the product, the standards it must meet or possible denaturing, those factors are irrelevant to the possibility of considering that a given product is a bioethanol for the purposes of that provision.
47. It follows from the foregoing that the answer to the first and second questions is that the definition of bioethanol in Article 2(2)(a) of Directive 2003/30 must be interpreted as meaning that it includes a product such as that at issue in the main proceedings, which is obtained inter alia from biomass and which contains more than 98.5% ethyl alcohol, once it is offered for sale as biofuel for transport.
Consideration of the third and fourth questions
48. According to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to determine the case before it. To that end, the Court may have to reformulate the questions referred to it (Case C‑334/95 Krüger
[1997] ECR I‑4517, paragraphs 22 and 23, and Case C‑420/06 Jager [2008] ECR I‑1315, paragraph 46).
49. In the present case, it is apparent from the order for reference that, by its third and fourth questions, the referring court asks, in reality, which tax scheme should be applied to a product such as that at issue in the main proceedings which potentially meets the definition of bioethanol in Article 2(2)(a) of Directive 2003/30. Directives 92/83 and 2003/96 both indicate that it is the CN classification in particular which determines the tax treatment of such a product.
50. In order to provide the referring court with a useful answer, it is therefore necessary to understand the third and fourth questions as inquiring, in essence, whether EU law must be interpreted as meaning that a product such as that at issue in the main proceedings, which potentially meets the definition of bioethanol in Article 2(2)(a) of Directive 2003/30, which is obtained from biomass by means of a technology which differs from the technology used for the production of agricultural ethyl alcohol, which contains more than 98.5% ethyl alcohol, which contains substances rendering it unsuitable for consumption, which complies with the requirements of European standard prEN 15376 for bioethanol as fuel and which has not been denatured in a special denaturing procedure, is, as regards the applicable excise duty, subject to the provisions of Directive 92/83 or those of Directive 2003/96.
51. Evroetil submits that such a product comes within the scope of Directive 2003/96, particularly since, as it is unsuitable for human consumption, it cannot be taxed as alcohol for use in foodstuffs. By contrast, the Direktor, the Bulgarian and Greek Governments and the Commission consider that such a product comes under Directive 92/83 for tax treatment purposes. The Commission observes inter alia that the application of Directive 92/83 takes priority over that of Directive 2003/96.
52. It should be borne in mind in that regard, first, that the provisions of Directive 2003/30 do not require the Member States to introduce, or maintain in force, a tax exemption scheme for biofuels. Consequently, no right to a tax exemption can be deduced from the provisions of that directive (see, to that effect, Case C‑201/08 Plantanol [2009] ECR I‑8343, paragraphs 33 to 38). Thus, contrary to what Evroetil and the referring court seem to consider, the classification of bioethanol for the purposes of Directive 2003/30 has no bearing on the tax treatment to be given under EU law to a product such as that at issue in the main proceedings.
53. Second, it should be noted that, according to recital 27 in the preamble to Directive 2003/96, that directive is without prejudice to the application of the relevant provisions of Directive 92/83 when the product intended for use, offered for sale or used as motor fuel or fuel additive is ethyl alcohol as defined in Directive 92/83. Accordingly, as rightly pointed out by the Commission, the application of the provisions of Directive 2003/96 is, in respect of ethyl alcohol for the purposes of Directive 92/83, subordinate to the application of the provisions of Directive 92/83. Thus, it is only if a product classified as ‘ethyl alcohol’ for the purposes of the latter directive is exempt from excise duty under that same directive that that product may, as the case may be, come under the provisions Directive 2003/96.
54. According to the first indent of Article 20 of Directive 92/83, the concept of ‘ethyl alcohol’ refers inter alia to ‘all products with an actual alcoholic strength by volume exceeding 1.2% which fall within CN codes 2207 and 2208’. CN code 2207 refers, in particular, to undenatured ethyl alcohol of an alcoholic strength by volume of 80% or higher and also ethyl alcohol, denatured, of any strength.
55. A product such as that at issue in the main proceedings, which is ethyl alcohol of an alcoholic strength by volume of over 80%, therefore comes within CN code 2207.
56. The fact that the term ‘bioethanol’ is not found in the wording of that CN heading is irrelevant in that regard. In the interests of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the CN and in the section or chapter notes (see, inter alia, Case C‑142/06 Olicom [2007] ECR I‑6675, paragraph 16 and case-law cited). In the case of a product such as that at issue in the main proceedings, although it may show certain particularities relating inter alia to its method of production, it nevertheless remains, in the light of its objective characteristics and properties, ethyl alcohol of an alcoholic strength by volume of over 80%.
57. The fact that such a product is unsuitable for human consumption is equally irrelevant for its classification under CN code 2207. As is apparent from its very title, Directive 92/83 seeks to harmonise in a general manner the structures of excise duties on both alcoholic beverages and alcohol (Case C‑163/09 Repertoire Culinaire [2010] ECR I‑0000, paragraphs 27 and 29).
58. It follows from the foregoing that a product such as that at issue in the main proceedings, coming under CN code 2207 and with an actual alcoholic strength by volume exceeding 1.2% meets the definition of ethyl alcohol in the first indent of Article 20 of Directive 92/83. Consequently it must, under Article 19(1) of that directive, be subject to the harmonised excise duty provided for by that directive, subject however to the exemption provided for in Article 27(1)(a) and (b) of the same directive.
59. It is clear from the wording of that provision that the grant or refusal of an exemption is dependent on the denaturing method. If that method has been approved at EU level, the alcohol is exempted from excise duties under Article 27(1)(a). If, on the other hand, the alcohol contained in a product not intended for human consumption has been denatured in accordance with a method approved in a Member State, the exemption provided for by Article 27(1)(b) should be applied. Moreover, if the denaturing method is not one of those approved either by the EU rules or by national laws then the product cannot be exempted (Case C‑482/98 Italy
v Commission [2000] ECR I‑10861, paragraphs 40 and 41).
60. It should also be borne in mind in that regard that denaturing is a process designed to render alcohol toxic through the addition of certain substances so that it cannot be re-converted for use in food products (see, to that effect, Italy
v Commission, paragraphs 21 and 22; see also, by way of information, the Harmonised System Explanatory Notes relating to heading 2207 drawn up by the World Customs Organisation, to which reference is made by the Explanatory Notes for the CN relating to CN code 2207, adopted by the Commission under the second indent of Article 9(1)(a) and Article 10 of Regulation No 2658/87, as amended by Council Regulation (EC) No 254/2000 of 31 January 2000 (OJ 2000 L 28, p. 16), in the version thereof in force as at 1 January 2007 (OJ 2006 C 50, p. 1)).
61. In the present case, it is apparent from the order for reference that no denaturing substance was intentionally added to the product at issue in the main proceedings in order to make it irreversibly unsuitable for human consumption. The conclusion must therefore be that it was not denatured for the purposes of Article 27(1)(a) or (b) of Directive 92/83, without its being necessary to consider whether the denaturing method employed corresponds to one of those approved by the EU or Bulgarian legal rules.
62. Consequently, it is irrelevant that, in respect of the Republic of Bulgaria, it is only through Regulation No 67/2008 that the description of the denaturants to be used for complete denaturing of alcohol in accordance with Article 27(1)(a) of Directive 92/83 was introduced in Regulation No 3199/93, as is the aspect, alleged by Evroetil at the hearing – and even if it were established – that provisions relating specifically to the denaturing of bioethanol were introduced in the Bulgarian legislation only in 2011. Moreover, it is apparent from the order for reference that, on the dates of the facts to which the questions referred to the Court relate, Article 4(12) of the Law on excise duties already provided that ‘“[d]enaturing” is a process by which poisonous ingredients (additives), or ingredients which are unpleasant to the taste or smell, are added to ethyl alcohol, rendering it dangerous to health or unsuitable for drinking’.
63. Moreover, the fact that a product such as the one at issue in the main proceedings is in itself unsuitable for human consumption is not sufficient for it to be regarded as having been denatured for the purposes of Article 27(1)(a) or (b) of Directive 92/83. As is clear from paragraph 60 of the present judgment, denaturing is the intentional addition of certain substances to alcohol in order to make it irreversibly unsuitable for human consumption. The mere fact that that alcohol is in itself toxic does not rule out the possibility of its being subsequently treated in order to remove its toxicity. Given that the requirement of irreversibility of the denaturing is aimed at preventing any evasion, avoidance or abuse in the field of excise duty exemptions, the mere cost of that treatment, even if it is high, does not, contrary to Evroetil’s submissions, suffice to rule out that possibility.
64. Lastly, as rightly pointed out by the Commission at the hearing, European standard prEN 15376, which has since been replaced by EN 15376:2011, entitled ‘Automotive fuels – Ethanol as a blending component for petrol – Requirements and test methods’ and approved by the European Committee for Standardisation (CEN) on 24 December 2010, provides in point 4.3 a list of recommended denaturants which do not have harmful effects on vehicles. Evroetil’s assertion that the denaturing of the product at issue in the main proceedings cannot be required because that would make it unsuitable for use as biofuel must therefore be rejected.
65. It follows from the foregoing that a product such as that at issue in the main proceedings, which meets the definition of ethyl alcohol in the first indent of Article 20 of Directive 92/83 and has not been denatured in accordance with Article 27(1)(a) and (b) of that directive cannot be exempted from the harmonised excise duty provided for by that directive. As follows from paragraph 53 of this judgment, such a conclusion rules out the possibility that it may come within the scope of Directive 2003/96.
66. In the light of the foregoing considerations, the answer to the third and fourth questions is that European Union law must be interpreted as meaning that a product such as that at issue in the main proceedings, which contains more than 98.5% ethyl alcohol and has not been denatured in a special denaturing procedure must be subject to the excise duty provided for in Article 19(1) of Directive 92/83, even where it was obtained from biomass using a technology which differs from the technology for the production of agricultural ethyl alcohol, contains substances making it unsuitable for human consumption, satisfies the requirements laid down in European standard prEN 15376 for bioethanol used as fuel and potentially meets the definition of bioethanol in Article 2(2)(a) of Directive 2003/30.
Costs
67. 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 (Eighth Chamber) hereby rules:
1. The definition of bioethanol in Article 2(2)(a) of Directive 2003/30/EC of the European Parliament and of the Council of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport must be interpreted as meaning that it includes a product such as that at issue in the main proceedings, which is obtained inter alia from biomass and which contains more than 98.5% ethyl alcohol, once it is offered for sale as biofuel for transport.
2. European Union law must be interpreted as meaning that a product such as that at issue in the main proceedings, which contains more than 98.5% ethyl alcohol and has not been denatured in a special denaturing procedure must be subject to the excise duty provided for in Article 19(1) of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages, even where it was obtained from biomass using a technology which differs from the technology for the production of agricultural ethyl alcohol, contains substances making it unsuitable for human consumption, satisfies the requirements laid down in European standard prEN 15376 for bioethanol used as fuel and potentially meets the definition of bioethanol in Article 2(2)(a) of Directive 2003/30.