Judgment of the Court of 12 May 1971. - Ludwig Wünsche & Co. v Hauptzollamt Ludwigshafen/Rhein. - Reference for a preliminary ruling: Finanzgericht Rheinland-Pfalz - Germany. - Agricultural levy/Turnover equalization tax. - Case 76-70.



European Court reports 1971 Page 00393

Danish special edition Page 00081

Greek special edition Page 00781

Portuguese special edition Page 00127



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - CEREALS - COMMON WHEAT, BARLEY, MAIZE AND RYE - THRESHOLD PRICE - CALCULATION - REDUCTION OF THE BASIC TARGET PRICE BY AN AMOUNT REPRESENTING THE INCIDENCE OF INTERNAL TAXATION LEVIED IN RESPECT OF IMPORTS

( REGULATION NO 19 OF THE COUNCIL, ARTICLE 4 )

2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - CEREALS - COMMON WHEAT, BARLEY, MAIZE AND RYE - THRESHOLD PRICE - CALCULATION - MISTAKE BY NATIONAL AUTHORITIES - POWERS OF THE COMMISSION - LIMITS

( REGULATION NO 19 OF THE COUNCIL, ARTICLE 4 )

Summary

1 . ARTICLE 4 OF REGULATION NO 19 OF THE COUNCIL OF THE EUROPEAN ECONOMIC COMMUNITY, ON THE PROGRESSIVE ESTABLISHMENT OF A COMMON ORGANIZATION OF THE MARKET IN CEREALS MUST BE INTERPRETED AS MEANING THAT IN CALCULATING THE THRESHOLD PRICE OF CEREALS THE BASIC TARGET PRICE MUST BE REDUCED INTER ALIA BY A FIXED AMOUNT CORRESPONDING TO THE INCIDENCE OF INTERNAL TAXATION LEVIED IN RESPECT OF IMPORTS, SUCH AS THE TURNOVER EQUALIZATION TAX .

2 . SINCE THE VALIDITY OF DECISIONS TAKEN BY THE MEMBER STATES IN FIXING THE THRESHOLD PRICE DOES NOT DEPEND ON THE VIEW TAKEN THEREOF BY THE COMMISSION BUT ON THEIR OBJECTIVE CONFORMITY WITH REQUIREMENTS OF THE REGULATION, THE SECOND PARAGRAPH OF ARTICLE 4 OF THAT REGULATION CANNOT BE INTERPRETED AS CONFERRING ON THE COMMISSION POWER TO VALIDATE BY ITS CONDUCT ERRORS WHICH THE NATIONAL AUTHORITIES MAY COMMIT IN IMPLEMENTING THE TASKS LAID DOWN IN THAT ARTICLE .

Parties

IN CASE 76/70

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FINANZGERICHT RHEINLAND-PFALZ FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

LUDWIG WUENSCHE AND COMPANY, HAMBURG,

AND

HAUPTZOLLAMT LUDWIGSHAFEN AM RHEIN,

Subject of the case

ON THE INTERPRETATION OF ARTICLES 2 AND 4 OF REGULATION NO 19 OF THE COUNCIL OF THE EEC, ON THE PROGRESSIVE ESTABLISHMENT OF A COMMON ORGANIZATION OF THE MARKET IN CEREALS ( OFFICIAL JOURNAL 1962, NO 30, P . 933 )

Grounds

1 BY AN ORDER OF 14 OCTOBER 1970 WHICH REACHED THE COURT ON 17 NOVEMBER 1970, THE FINANZGERICHT RHEINLAND-PFALZ PUT TO THE COURT OF JUSTICE, PURSUANT TO ARTICLE 177 OF THE TREATY ESTABLISHING THE EUROPEAN COMMUNITY, TWO QUESTIONS ON THE INTERPRETATION OF VARIOUS PROVISIONS OF REGULATION NO 19 OF THE COUNCIL OF THE EEC ON THE PROGRESSIVE ESTABLISHMENT OF A COMMON ORGANIZATION OF THE MARKETS IN CEREALS ( OFFICIAL JOURNAL 1962 NO 30, P . 933 ).

THE FIRST QUESTION

2 FIRST, THE COURT IS REQUESTED TO RULE WHETHER ARTICLES 2 AND 4 OF THE SAID REGULATION MUST BE INTERPRETED AS MEANING THAT IN CALCULATING THE LEVY THERE MUST BE DEDUCTED FROM THE THRESHOLD PRICE AN AMOUNT EQUAL TO THE TURNOVER EQUALIZATION TAX LEVIED IN RESPECT OF IMPORTS .

3 IT IS CLEAR FROM THE GROUNDS OF THE ORDER OF THE FINANZGERICHT THAT THE QUESTION RELATES TO IMPORTS OF BARLEY OF BREWERY QUALITY TO THE FEDERAL REPUBLIC FROM ANOTHER MEMBER STATE EFFECTED IN DECEMBER 1962 WHEN A THRESHOLD PRICE WAS IN FORCE WHICH HAD BEEN ADOPTED BY THE COMPETENT FEDERAL AUTHORITIES AND WHICH DID NOT TAKE ACCOUNT OF THE IMPOSITION OF THE NATIONAL TURNOVER EQUALIZATION TAX ON THE PRICES OF IMPORTED PRODUCTS . SINCE THE IMPORTER HAD THEREBY HAD TO PAY BOTH AN INTRA-COMMUNITY LEVY BASED ON THE DIFFERENCE BETWEEN THE THRESHOLD PRICE AND THE FREE-AT-FRONTIER PRICE FIXED BY THE COMMISSION AND THE TURNOVER EQUALIZATION TAX, IT BROUGHT THE MATTERS BEFORE THE FINANZGERICHT AS IT CONSIDERED THAT THIS MULTIPLE TAXATION WAS INCOMPATIBLE WITH THE PROVISIONS OF REGULATION NO 19 .

4 UNDER ARTICLE 4 OF REGULATION NO 19 THE THRESHOLD PRICE FOR THE DISPUTED PRODUCT WAS FIXED ANNUALLY BY THE MEMBER STATES IN SUCH A WAY THAT THE SELLING PRICE OF THE IMPORTED PRODUCT IN THE MARKETING CENTRE OF THE ZONE HAVING THE LARGEST DEFICIT IN THE MEMBER STATE CONCERNED SHOULD BE LEVEL WITH THE BASIC TARGET PRICE LAID DOWN IN ARTICLE 5 OF THAT REGULATION . THE BASIC TARGET PRICE DETERMINES THE LEVEL FIXED, BEARING IN MIND THE OBJECTIVES LAID DOWN BY ARTICLE 39 OF THE TREATY, IN ACCORDANCE WITH WHICH MARKET PRICES REQUIRED TO BE ALIGNED THROUGH THE CONVERTING MACHINERY OF THE COMMON ORGANIZATION OF THE MARKETS IN THE APPROPRIATE SECTOR . IN ORDER TO PREVENT PRICE DISTURBANCES AS A RESULT OF CHEAP IMPORTS THE THRESHOLD PRICE AS PROVIDED FOR BY REGULATION NO 19 WAS INTENDED TO FIX THROUGH LEVIES THE LEVEL TO WHICH THE PRICE OF THE IMPORTED PRODUCT MUST BE INCREASED IN ORDER THAT IT SHOULD NOT BE OFFERED ON THE MARKET IN QUESTION AT A PRICE LOWER THAN THE BASIC TARGET PRICE . IN ORDER TO FULFIL THIS CONDITION THE PRICE OF THE IMPORTED PRODUCT AFTER CROSSING THE FRONTIER - INCREASED BY THE MARKETING COSTS UP TO THE PLACE WHERE THE BASIC TARGET PRICE WAS TO BE APPLIED - WAS REQUIRED TO CORRESPOND TO THIS PRICE, SO THAT THE THRESHOLD PRICE WAS TO BE EQUAL TO THE BASIC TARGET PRICE REDUCED BY THE MARKETING EXPENSES INCURRED BETWEEN THE FRONTIER AND THE FIRST STAGE OF WHOLESALE MARKETING AT THE PLACE WHERE THE BASIC TARGET PRICE WAS APPLIED .

5 IN ESTABLISHING THE SYSTEM OF LEVIES PROVIDED FOR BY REGULATION NO 19 THE COMMUNITY LEGISLATURE DELIBERATELY REFRAINED FROM RAISING THE INDIVIDUAL SELLING PRICES OF THE IMPORTED PRODUCT TO THE LEVEL OF THE BASIC TARGET PRICE OF THE IMPORTING MEMBER STATE AND OPTED FOR A GENERAL SYSTEM OF LEVIES ESTABLISHED ON THE BASIS OF THE MOST ADVANTAGEOUS PURCHASING OPPORTUNITIES ON THE WORLD MARKET OR IN THE EXPORTING MEMBER STATE, AND ON THE BASIS OF LUMP SUM AMOUNTS . WITHIN THIS SYSTEM THE MARKETING COSTS, BY WHICH THE TARGET PRICE WAS TO BE REDUCED IN ORDER TO FIX THE THRESHOLD PRICE, WERE THUS NOT TO BE CALCULATED ON THE BASIS OF THE COSTS ACTUALLY BORNE BY THE IMPORTER FOR A SPECIFIC CONSIGNMENT, WHICH DEPEND TO A LARGE EXTENT ON THE DECISIONS OF THE IMPORTER BUT WERE TO BE SUBJECT TO A FLAT-RATE CALCULATION OF THE COSTS WHICH THE IMPORTER MUST UNAVOIDABLY BEAR .

6 THE TURNOVER EQUALIZATION TAX WHICH IS LEVIED WITHOUT EXCEPTION ON EVERY IMPORT OF CEREALS FORMS PART OF THE UNAVOIDABLE MARKETING COSTS AND THUS CONSTITUTES A NECESSARY ELEMENT IN CALCULATING THE THRESHOLD PRICE . IF THIS WERE NOT THE CASE THE THRESHOLD PRICE AND, CONSEQUENTLY THE LEVIES, WOULD BE INCREASED BY THE AMOUNT OF THE TURNOVER EQUALIZATION TAX, SO THAT THE PRODUCT COULD NOT BE OFFERED AT THE LEVEL OF THE BASIC TARGET PRICE . IN THIS RESPECT IT IS CLEAR FROM THE PROVISIONS OF AND FROM THE PREAMBLE TO REGULATION NO 19 THAT THE BASIC TARGET PRICE WAS NOT INTENDED TO PERFORM THE ROLE OF A MINIMUM DOMESTIC PRICE WHICH THE NATIONAL LEGISLATURE WOULD BE FREE TO RAISE BUT WAS INTENDED TO ACT AS A STABILIZING ELEMENT ON THE MARKET . IN ADDITION, THE FURTHER OBJECTIVE SET OUT BY THE REGULATION ITSELF WAS THAT IN ORDER TO ESTABLISH A SINGLE MARKET THE NATIONAL TARGET PRICES SHOULD BE PROGRESSIVELY ALIGNED TO A COMMON TARGET PRICE SO THAT THE APPLICATION OF THIS REGULATION WAS TO MAKE A CONTRIBUTION SO THAT THE DIFFERENCE BETWEEN THE HIGHEST AND THE LOWEST NATIONAL TARGET PRICE SHOULD NOT BE INCREASED . THE RIGHT OF THE MEMBER STATES TO INCREASE THE SELLING PRICE OF IMPORTED CEREALS TO A HIGHER LEVEL THROUGH TAXES SUCH AS THE TURNOVER EQUALIZATION TAX WOULD HAVE BEEN INCOMPATIBLE WITH THIS OBJECTIVE . AS THE FINANZGERICHT ITSELF NOTES IN THE GROUNDS OF ITS ORDER, OPPOSING ARGUMENTS DERIVED FROM REGULATIONS RELATING TO THE COMMON ORGANIZATION OF THE MARKETS IN OTHER SECTORS CANNOT INVALIDATE THE CONCLUSION TO BE DRAWN FROM THE WORDING OF REGULATION NO 19 .

7 THE REPLY SHOULD THUS BE THAT ARTICLE 4 OF REGULATION NO 19 MUST BE INTERPRETED AS MEANING THAT IN CALCULATING THE THRESHOLD PRICE OF CEREALS THE BASIC TARGET PRICE MUST BE REDUCED INTER ALIA BY A FIXED AMOUNT CORRESPONDING TO THE INCIDENCE OF INTERNAL TAXATION LEVIED IN RESPECT OF IMPORTS, SUCH AS THE TURNOVER EQUALIZATION TAX .

8 OWING TO THE VERY SPECIFIC NATURE OF THIS CHARGE, IF THE NATIONAL LEGISLATURE HAS NOT TAKEN IT INTO CONSIDERATION IN CALCULATING THE THRESHOLD PRICE, COMMUNITY LAW DOES NOT PREVENT THE NATIONAL COURT FROM SETTING OFF THE AMOUNT ACTUALLY PAID AS TURNOVER EQUALIZATION TAX AGAINST THE LEVY PAID BY THE IMPORTER .

THE SECOND QUESTION

9 THE SECOND QUESTION ASKS WHETHER IT FOLLOWS FROM THE SECOND PARAGRAPH OF ARTICLE 4 OF REGULATION NO 19 THAT THE COMMISSION COULD APPROVE, ALBEIT BY IMPLICATION, AN ERRONEOUS METHOD OF CALCULATING THE THRESHOLD PRICE ADOPTED BY THE NATIONAL AUTHORITIES SO THAT THE COMMISSION' S CONDUCT WOULD RECTIFY THIS DEFECT .

10 IN ACCORDANCE WITH THE STRUCTURE OF THE COMMUNITY, THE COMMON ORGANIZATION OF THE MARKETS IN CEREALS ESTABLISHED BY REGULATION NO 19 RESTS ON CLOSE COOPERATION BETWEEN THE MEMBER STATES AND THE COMMUNITY INSTITUTIONS, BOTH PERFORMING ON THEIR OWN INITIATIVE THEIR DUTIES UNDER COMMUNITY LAW . THE SECOND PARAGRAPH OF ARTICLE 4 ONLY PROVIDES THAT THE THRESHOLD PRICES ADOPTED MUST BE NOTIFIED TO THE COMMISSION AND THAT THE LATTER SHOULD HAVE POWER TO REVISE IT IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN ARTICLE 26 OF THE REGULATION . THIS INDEPENDENT POWER OF REVISION ENABLES THE COMMISSION TO REPLACE INCORRECT PRICES BY CORRECT PRICES WHICH IT FIXES ITSELF . FAILURE TO EXERCISE THIS POWER CANNOT BE INTERPRETED AS MEANING THAT THE COMMISSION CONCURS IN THE DECISIONS TAKEN BY THE MEMBER STATES, THE MORE SO SINCE IT HAD, IN FACT, LIMITED OPPORTUNITIES OF CHECKING THE ACCURACY OF THE THRESHOLD PRICES ADOPTED . FURTHERMORE EVEN THE IMPLIED OR EXPRESS AGREEMENT OF THE COMMISSION IS INCAPABLE OF VALIDATING DECISIONS OF NATIONAL AUTHORITIES TAKEN UNDER ARTICLE 4 SINCE THE VALIDITY OF SUCH DECISIONS DOES NOT DEPEND ON THE VIEW TAKEN THEREOF BY THE COMMISSION BUT ON THEIR OBJECTIVE CONFORMITY WITH THE REQUIREMENTS OF THE REGULATION .

11 CONSEQUENTLY, THE REPLY MUST BE GIVEN THAT THE SECOND PARAGRAPH OF ARTICLE 4 CANNOT BE INTERPRETED AS CONFERRING UPON THE COMMISSION THE POWER TO VALIDATE BY ITS CONDUCT ERRORS WHICH THE NATIONAL AUTHORITIES MAY COMMIT IN THE IMPLEMENTATION OF THE TASKS LAID DOWN IN THAT ARTICLE .

Decision on costs

12 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES WHICH SUBMITTED ITS OBSERVATIONS TO THE COURT ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE FINANZGERICHT RHEINLAND-PFALZ, THE DECISION ON COSTS IS CONSEQUENTLY A MATTER FOR THAT COURT .

Operative part

THE COURT

IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE FINANZGERICHT RHEINLAND-PFALZ, BY AN ORDER OF THAT COURT OF 14 OCTOBER 1970, HEREBY RULES :

1 . ARTICLE 4 OF REGULATION NO 19 OF THE COUNCIL OF THE EUROPEAN ECONOMIC COMMUNITY ON THE PROGRESSIVE ESTABLISHMENT OF A COMMON ORGANIZATION OF THE MARKET IN CEREALS MUST BE INTERPRETED AS MEANING THAT IN CALCULATING THE THRESHOLD PRICE OF CEREALS THE BASIC TARGET PRICE MUST BE REDUCED, INTER ALIA, BY A FIXED AMOUNT CORRESPONDING TO THE INCIDENCE OF INTERNAL TAXATION LEVIED IN RESPECT OF IMPORTS, SUCH AS THE TURNOVER EQUALIZATION TAX .

2 . THE SECOND PARAGRAPH OF ARTICLE 4 OF THAT REGULATION MAY NOT BE INTERPRETED AS CONFERRING UPON THE COMMISSION THE POWER TO VALIDATE BY ITS CONDUCT ERRORS WHICH THE NATIONAL AUTHORITIES MAY COMMIT IN THE IMPLEMENTATION OF THE TASKS LAID DOWN IN THAT ARTICLE .