1.

On the first question. If one adheres strictly to the wording in which it has been couched, then there is clearly no difficulty in replying to the first question. It has long been known from other cases that the meaning of Article 95 lies in the prohibition of discrimination: pursuant to the Article, imported goods should not have to bear higher domestic duties than similar domestic products (cf. Case 31/67, Rec. 1968, p. 351). Looked at in this way, the assumption lies close at hand that this provision excludes the possibility that after levying a charge which inter alia is to be an equivalent of the domestic turnover tax, one should thereafter, consequent upon the installation of the machinery permit once again the levy of turnover tax based upon the value of the machinery and the costs of installation. Proceeding from the wording of the question, one feels constrained to reply that such double taxation cannot be reconciled with Article 95. One could furthermore not argue against it that circumstances within a country itself might be imagined in which such machines are first delivered by the manufacturer to an intermediate dealer and then on to the final customer; circumstances therefore which on the basis of the system of cumulative multi-stage tax might likewise result in a twice-over levy of tax. This objection is likely to be of little importance because for reasons of avoiding unnecessary taxation such dealings are only rarely met, because they are not typical. As the Commission has rightly stressed, not least by referring to Article 97 of the EEC Treaty (i.e. the possibility of establishing average rates on levying turnover equalization tax) only typical marketing procedures can be considered in the present context, i.e. we shall have to base ourselves on the national tax at the stage of the manufacturer selling directly to the final customer. Since however under these circumstances turnover tax is certainly only payable once, the conclusion does indeed lie close at hand that one ought to treat as unlawful under Article 95 of the EEC Treaty the facts which, as described by Italian judge look at first sight like double taxation. And yet, examined closely, the solution of the problem posed may not be quite so simple; this by reason of the arguments put forward by the Federal German government. As you know the Federal Government emphatically denies that turnover tax was already contained within the turnover equalization tax. They maintain that tax comparisons were only valid in relation to individual cases. If such a test were correctly applied to the goods under discussion, if therefore one tried to ascertain what turnover tax applied to similar installations manufactured and erected within the country itself, then we would find not only a charge to 4 per cent turnover tax on supply of goods and provision of services but having regard to the system of multi-stage turnover tax, likewise taxes on the preliminary stages of manufacture, i.e. taxes on the preliminary deliveries of basic materials and semi-finished products. It is said that this prior taxation amounted to more than 6 per cent in the case of most capital goods and that in the case of special carding machines, the products with which we are here concerned, they had reached a level of 5.71 per cent. In this way one would however have reached a total tax of around 10 per cent and that this therefore demonstrates — especially if one considers that the level of 6 per cent turnover equalization tax is but an average level — that notwithstanding double taxation on imported industrial installations, there was no case for alleging discrimination against foreign products. We are therefore bound to ask ourselves, can we just ignore these points, as the plaintiffs in the national proceedings and the Commission apparently consider they ought to be? To me that does not seem free from objection, even if one cannot avoid agreeing that some of the arguments presented by them are certainly not without substance. Thus it is doubtless correct to assume that in general the turnover equalization tax had the purpose of bringing out equal treatment for imported goods from the point of view of turnover tax and that in two respects: firstly, having regard to the fact that imported goods were not subject to turnover tax on leaving the country of origin (compensation in respect of liability to indirect turnover tax) and secondly having regard to the fact that a refund of prior taxation was granted (compensation in respect of liability to direct turnover tax). Looked at in this way, the conclusion cannot be rejected that the turnover tax is already ‘comprised’ within the turnover equalization tax. This, by the way, accords with opinions expressed in relevant legal text and in support of this one might last but not least point to the Federal Government's declaration to the Commission on 12 March 1963, according to which the turnover equalization tax rate of 6 per cent comprise the general turnover tax of 4 per cent and that only the remaining 2 per cent are to be treated as the actual turnover equalization tax, i.e. as a turnover equalization measure in respect of prior tax. One is further given food for thought, when in this connection it is said that the Federal Government's argument implies that a full measure of turnover equalization tax only occurs in the relatively few cases of delivery of goods coupled with erection whilst in the far greater number of ordinary imports such turnover equalization does not occur. On the other hand (and this can be adduced in support against the Commission's view that is to be assumed that the turnover equalization tax is equal in amount to the national taxation), we can likewise not escape from what is expressly stressed in the relevant text books, viz. that full measure of turnover equalization of the prior taxation would not have been achieved with a rate of 2 % (cf. ‘Kommentar zum Umsatzsteuergesetz’ by Hübschmann, Grabower, Beck, v Wallis, Schwarz, Schmidt; note 4 on paragraph 7, subparagraphs 4-7). Particularly noteworthy is what Schwarz says in this connection (vide his ‘Kommentar zur Umsatzausgleichsteuer’, note 14 on paragraph 7 of the Umsatzsteuergesetz) viz. the realization that at the stage of discussion of the Umsatzsteueränderungsgesetz (law amending the turnover tax) importance had been attached not raising the turnover equalization tax in every case, in which a rate of turnover equalization tax had remained below the turnover tax assessed on comparable nationally produced goods, but only then when the divergence had led to such far-reaching restraint on competition that structural effects made their appearance in the relevant sectors of the economy. We also discover a similar view in the declaration made by the Federal Government to the Commission, which indeed states that most products had to bear a prior taxation of over 50 per cent of the normal rate and that in the view of the ‘Bundesverband der deutschen Industrie’ this prior turnover tax even amounts to 4 % in the case of 96 per cent of all products. Furthermore, there is the significant fact that the rates of refund applicable to exports (of which by the way, it is said in a comment by. the Federal German Minister of Finance to the Commission dated 13 November 1959, that they were too low and not a sufficient equalization of the prior taxation) of an amount of 3 per cent had been fixed which would certainly not have been tolerated, had one been obliged to proceed from the fact that the proportion of 2 per cent in the turnover equalization tax had as its purpose a complete equalization of the prior taxation. What are we then to conclude from all these views in relation to which the Federal Government has adduced what in my view are convincing reasons from a viewpoint of trade policy? Surely it can only be this: that in relation to the application of Article 95 of the EEC Treaty it is just not feasible to concentrate only on the process of taxation, i.e. on the fact that in a given case (as indeed happened in the national proceedings) imported goods were repeatedly subjected to turnover tax. In the light of the Federal Government's attempt by means of exact figures and the calling upon ‘experts’ opinions, to bring forward proof of equality of treatment of imported products, it is rather, necessary to undertake a comparison of taxation in the individual case. Only this comparison will then show whether Article 95 has been infringed in the circumstances which are of interest in the national proceedings. Such a comparison cannot of course be undertaken in the present case, since this would no longer constitute interpretation but application of the law, a course which the Court is only able to adopt in a case under Article 169. In the framework of the present proceedings it is rather a matter for the national judge alone, who in solving this difficult problem, will if necessary have to call upon the assistance of experts. With this I can conclude my reply to the first question — and if one wishes to reply to the question in a meaningful way one had best not keep too closely to the strict wording — and I shall now turn to the second question in the preliminary case submitted.