4.

At this stage, however, before coming to any final conclusions, I must consider a point which is made in the grounds of the order for reference and is also thought to be appropriate by the Commission, namely whether it is not legitimate simply to deduct from the Preisspitze, that is to say from the monopoly's administrative costs, the amount which is also left out of account in calculating the so-called “Branntweinaufschlag” in connection with the taxation of domestic spirit exempt from the requirement to sell to the monopoly. That would mean that since the Branntweinaufschlag is reduced by administrative costs saved by the monopoly amounting to DM 31, the imposition of the Monopolausgleichspitze would have been permissible, in any event át a rate of DM 49 (DM 80 minus DM 31). In that regard the Commission drew attention to the system and structure of the German Spirits Monopoly. The fact that a distinction is drawn thereunder between spirit which is subject to the requirement to sell to the monopoly and spirit which is exempt from that requirement suggests that imported spirits should be equated with those domestic products which likewise do not pass through the monopoly. Moreover, in its view that solution is the most apt to avoid distortions of competition, which, as the Commission demonstrated by means of a number of examples, might otherwise occur. Moreover, to justify that conclusion it made a number of points which I shall consider in detail later. (a) My first impression in this matter is that it is scarcely possible to justify in principle the imposition of the Monopolausgleichspitze at the rate arrived at after deducting the administrative costs saved by the monopoly, as fixed generally for the purposes of the Branntweinaufschlag. The defendant rightly doubts whether the above-mentioned arbitrary figure is sufficient to actually cover the administrative costs saved, let alone elements such as the variance from the average acquisition prices actually paid, the losses incurred by the sale of spirits at reduced prices and the costs of storage, transportation and purification. Indeed, it must not be overlooked that the Preisspitze also contains the monopoly's profit, which must be remitted to the Federal Treasury and that, for example in the financial years 1973 and 1975 substantial amounts were involved (DM 32 million and DM 60 million respectively). References to the structure and system of the Spirits Monopoly and to the danger which would otherwise exist of distortions of competition would in any event not seem to provide sufficient reason simply to equate for the purposes of taxation imported spirits with domestic spirits exempt from the requirement to sell to the monopoly. In any case, in so far as the alleged distortions of competition are concerned, Article 95 does not preclude discrimination against domestic products, as was correctly emphasized during the procedure. (b) Consequently, the solution which the Commission considers to be correct may be accepted only on condition — and this brings me to the further points which it made — that the similarity of the imported product and the domestic spirit exempt from the requirement to sell to the monopoly can be assumed. In that case there would be no need to consider further the difficult question of the extent to which the costs of the monopoly administration cannot be regarded as taxation; instead, it may be thought appropriate to extend to imported spirits the more favourable tax rules — because of the deduction of the administrative costs — applicable to domestic spirit which is exempt from the requirement to sell to the monopoly. It must be remembered in that regard that according to the judgment of 27 February 1980 in Case 168/78 Commission of the European Communities v French Republic [1980] ECR 347 the term “similar” must be interpreted widely and flexibly. In any event, the Court stated that it was sufficient for the purposes of the application of Article 95 that the products in question should be in partial, indirect or potential competition and that it should be possible to establish those competitive conditions by reference to one or several economic uses to which the products might be put. Accordingly, it held in that judgment that in the case of spirits there was an indeterminate number of beverages which might be regarded as similar within the meaning of the first paragraph of Article 95 and that, because all spirits possessed common characteristics, it could be accepted that there was at least partial or potential competition, sufficient in any event for the application of the second paragraph of Article 95 (paragraph 12 of the decision, at p. 362). In view of what the Commission pointed out during the procedure — namely that in the case of pure alcohol the raw materials used (wine, cereals, fruit, potatoes) can be identified only at considerable expense and that when the alcohol is used to manufacture spirits such as those in question in the main proceedings, the raw materials lose all significance — there can scarcely be any doubt that imported ethyl alcohol of agricultural origin is similar to domestic alcohol derived from wine and fruit which is exempt from the obligation to sell to the monopoly. Consequently, it does in fact seem to be justified to charge in principle an equivalent amount of tax on such imported spirit, that is to say, to levy, instead of the Monopolausgleichspitze at a rate of DM 80, a tax equal to the Branntweinaufschlagspitze [spirits surcharge margin] (DM 49). In that connection, no problem arises, moreover, from the fact — here I have in mind the term “quantified” used in the judgment in Case 45/75 — that the Branntweinaufschlagspitze as such is not fixed but is calculated from basic values laid down by authority. (c) Accordingly, it remains to be considered only — and not least with regard to the arguments put forward by the Hauptzollamt before the Bundesfinanzhof — whether any reservations or further comments should be added to the points which I have made so far because the Branntweinaufschlag was not a uniform tax but — by means of additional charges or deductions taking the form of percentages of the basic price — differed according to the size of the distilleries and the raw materials used. As the Court has heard, the result was that at the relevant time surcharge rates ranging from DM 1149.20 to DM 1599.54 applied and, in exceptional cases, could be even higher. There is probably no reason to do so because in the oral procedure the defendant stated that it was unable to ascertain where the imported spirit was produced and that it was therefore not in a position to verify that the product was one which had to be equated with a quite specific domestic product produced by a favoured small distillery. This matter must of course be resolved finally not within the context of proceedings for a preliminary ruling but, if necessary, by the national court. However, for the sake of completeness, there is still a further point to be considered for the purpose of the preliminary ruling concerning the differential rates applied in the case of the Branntweinaufschlag. Reference may be made in that connection to dicta in the judgment in Case 45/75, where it was stated that it was incompatible with Article 95 to tax imported products according to a method of calculation or manner of imposition which differed from those applying to the tax imposed on domestic products — imposition of a uniform amount in one case and a graduated amount in the other — and was stressed that it was sufficient to constitute an infringement of Article 95 if imported products were taxed more highly only in a minority of cases. The judgment of 10 October 1978 in Case 148/77- H. Hansen jun. & O. C. Balle GmbH & Co ν Hauptzollamt Flensburg [1978] ECR 1787 should also be recalled. In that case it was emphasized that Article 95 did not allow distinctions to be made for reasons social or otherwise or according to the relative importance of any special systems as compared with the ordinary taxation system; on the contrary, it was necessary to extend preferential systems in national tax provisions to products coming from other Member States, if the provisions of the first and second paragraphs of Article 95 were to be complied with.