OPINION OF ADVOCATE GENERAL

Jacobs

delivered on 14 July 2005 ( )

Case C-197/04

Commission of the European Communities

v

Federal Republic of Germany





1. In this case, the Commission seeks a declaration that, by applying the tax rate for fine-cut tobacco for self-rolled cigarettes to rolls of tobacco sold under the name ‘West Single Packs’, the Federal Republic of Germany has failed to fulfil its obligations under Article 4(1)(b) of Council Directive 95/59/EC ( ) and Article 2(1) of Council Directive 92/79/EEC. ( )

2. The issue between the parties is whether for excise duty purposes such rolls should be deemed to be cigarettes or fine-cut tobacco for the rolling of cigarettes.





Relevant legislation

3. In the Community, rates of excise duty on tobacco products are to a certain extent harmonised. An exposition of the detailed rules applicable to that harmonisation is unnecessary here. It need merely be noted that the overall duty, which normally comprises a specific element (per unit of the product) and an ad valorem element, is subject to a minimum which varies according to the type of product.

4. For cigarettes, under Article 2(1) of Directive 92/79, ( ) that minimum is 57% of the retail selling price inclusive of all taxes, and not less than EUR 60 per 1 000 cigarettes, for cigarettes of the price category most in demand.

5. For fine-cut smoking tobacco intended for the rolling of cigarettes, the minimum rate is fixed in Article 3(1) of Council Directive 92/80/EEC ( ) at 36% of the retail selling price inclusive of all taxes, or EUR 32 per kilogram.

6. Directive 95/59 provides certain definitions of tobacco products for the purposes of harmonisation of the structure of excise duties on manufactured tobacco.

7. Under Article 4(1) the following are deemed to be cigarettes:

‘(a) rolls of tobacco capable of being smoked as they are and which are not cigars or cigarillos …;

(b) rolls of tobacco which, by simple non-industrial handling, are inserted into cigarette-paper tubes;

(c) rolls of tobacco which, by simple non-industrial handling, are wrapped in cigarette paper.’

8. The definition in Article 4(1)(b) is prefigured in recital 14 in the preamble to the directive by the statement that ‘rolls of tobacco capable of being smoked as they are after simple handling should … be deemed to be cigarettes for the purposes of uniform taxation of these products’.

9. Fine-cut tobacco for the rolling of cigarettes is a largely self-defining concept. It is further defined in Article 6 of Directive 95/59 by reference to cut width, but that criterion is not in issue in the present case.

10. In Germany, the definitions in Article 4(1) of Directive 95/59 are transposed, in substantially identical terms, in Paragraph 2(2)(2) of the Tabaksteuergesetz (Law on Tobacco Duty), as amended.





The product in issue

11. West Single Packs are a tobacco product sold in Germany. They are rolls of fine-cut tobacco, each wrapped in a tube of aluminium foil open at both ends, of the appropriate dimensions to be inserted into filter-tipped cigarette-paper tubes also sold under the brand name ‘West’.

12. In order to make a cigarette from those components, a smoker inserts a tobacco roll, in its aluminium wrapping, into a cigarette-paper tube and then withdraws the wrapping leaving the tobacco inside the tube.

13. For that purpose, the manufacturer markets an appliance called a ‘West Maker’, of dimensions and outward appearance similar to those of a ball-point pen. It consists essentially of a tube with a prehensile end and an internal rod or plunger. The prehensile end lightly grips the extremity of the aluminium foil wrapping, which protrudes slightly from the cigarette-paper tube. By sliding the rod or plunger, the smoker then pushes the tobacco roll and paper tube away from the foil wrapping, so that they form a complete cigarette ready to be smoked. ( )





Procedure

14. It appears that the rates of excise duty levied in Germany on cigarettes and on fine-cut rolling tobacco comply with the respective minimum rates in the Community legislation, but that Germany applies the lower rate for rolling tobacco to West Single Packs.

15. The Commission, objecting to that classification, commenced the procedure provided for in Article 226 EC on 18 October 2002, subsequently sending Germany a reasoned opinion on 11 July 2003.

16. Germany maintained its view that its classification was correct. The Commission therefore brought the present action on 30 April 2004.





Assessment

17. The case concerns the excise classification of a single product. No argument having been put to the Court on the classification of other similar, but not identical, products, the only question is whether that specific product falls within the definition of a cigarette in Article 4(1)(b) of Directive 95/59. If it does not, no other classification has been suggested than that of fine-cut tobacco for the rolling of cigarettes.

18. In determining whether West Single Packs fall within the definition of a cigarette, there is only one point of disagreement between the parties: whether the process of assembly constitutes simple non-industrial handling.

19. At the hearing, the agent for the Commission deftly produced a cigarette using the materials and method I have described in points 11 to 13. It certainly looked very simple. However, a number of arguments have been put forward on the interpretation of Directive 95/59.

20. Those arguments dwell to a large extent on the wording of Article 4(1)(b) and of recital 14 in the preamble. I do not think however that any detailed guidance can be derived from scrutiny of that wording.

21. For example, the phrase ‘simple non-industrial handling’ in English (‘einfachen nichtindustriellen Vorgang’ in German) is rendered in French as ‘simple manipulation non industrielle’, a word-order (echoed in other Romance languages) which might imply a relationship between ‘simple’ and ‘non-industrial’ different from that in English or German, making less significant the absence of a comma between ‘simple’ and ‘non-industrial’ in either of the latter. And no common conclusion at all can be drawn in my view from the specific wording of recital 14 in the three languages: ‘simple handling’ in English, ‘simple manipulation manuelle’ in French and ‘einfachen Vorgang nicht industrieller Art’ in German. It seems unlikely that reference to the full range of language versions could provide any greater clarity.

22. That degree of semantic spread over the various language versions, and as between the preamble and the enacting terms, in my view rules out any strict interpretation of the phrase ‘simple non-industrial handling’, taken in isolation. Rather, a systematic criterion must be found. The parties agree that, in the interest of legal certainty, that criterion must be clear and precise. I believe that the wording of the definition reveals such a clear and precise criterion when correctly viewed in the scheme of the provisions in issue.

23. Under Community rules, tobacco which is presented in, or can be made into, the form of cigarettes is subject to one of two minimum rates of duty and there is, at least for the time being, a significant difference between those two minimum rates.

24. In that context, it would be undesirable to take as a criterion distinguishing the two categories any kind of cut-off point on the sliding scale, on which there are no measurable units, between simplicity and complexity in the process of assembling a cigarette from its various component parts. Wherever and however that cut-off point might be fixed, there would always be uncertainty in classifying products which came near it.

25. Indeed, I think it may be assumed that on a commonsense interpretation practically any process whereby a smoker makes his own cigarettes from manufactured components constitutes simple non-industrial handling. If the process could not be performed, after a modicum of practice, with relative ease and to a moderate degree of competence by the average smoker in order to produce an acceptable cigarette, it is unlikely that the components would find a market.

26. What distinguishes the products defined as cigarettes in Article 4(1) of Directive 95/59 from ‘fine-cut tobacco for the rolling of cigarettes’ is thus not the relative simplicity or complexity of the manual assembly of the final cigarette.

27. A clear distinguishing feature exists however in the fact that all the products defined as cigarettes are (manufactured) ‘rolls’ of tobacco, whereas the other category is ‘for … rolling’. Although the contrast may not be as verbally explicit in some other language versions as it is in English, there is a clear material distinction between tobacco already made up by the manufacturer into a unit of the shape and size of a cigarette, and loose tobacco which must be coaxed into that form by the smoker.

28. In that light, ‘West Single Packs’ must be classified as cigarettes under Article 4(1)(b) of Directive 95/59 and must bear the minimum rate of duty laid down in Article 2(1) of Directive 92/79. Germany has therefore failed to fulfil its obligations under those provisions, as alleged by the Commission.





Costs

29. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to pay the costs if they have been applied for in the successful party’s pleadings. The Commission has applied for costs.





Conclusion

30. I am therefore of the opinion that the Court should:

– declare that, by applying the tax rate for fine-cut tobacco for self-rolled cigarettes to rolls of tobacco sold under the name ‘West Single Packs’, the Federal Republic of Germany has failed to fulfil its obligations under Article 4(1)(b) of Council Directive 95/59/EC of 27 November 1995 on taxes other than turnover taxes which affect the consumption of manufactured tobacco and Article 2(1) of Council Directive 92/79/EEC of 19 October 1992 on the approximation of taxes on cigarettes;

– order the Federal Republic of Germany to pay the costs.