Judgment of the Court of 10 October 1978. - H. Hansen jun. & O. C. Balle GmbH & Co. v Hauptzollamt de Flensburg. - Reference for a preliminary ruling: Finanzgericht Hamburg - Germany. - Taxation of spirits. - Case 148/77.



European Court reports 1978 Page 01787

Greek special edition Page 00563

Portuguese special edition Page 00615

Spanish special edition Page 00511

Swedish special edition Page 00157

Finnish special edition Page 00159



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

1 . EEC TREATY - GEOGRAPHICAL AREA OF APPLICATION - FRENCH OVERSEAS DEPARTMENTS - TAX PROVISIONS - PROHIBITION OF DISCRIMINATION - APPLICABILITY

( EEC TREATY , ART . 95 AND ART . 227 ( 1 ) AND ( 2 ))

2 . TAX PROVISIONS - INTERNAL TAXATION - PREFERENTIAL TREATMENT OF CERTAIN TYPES OF SPIRITS OR CERTAIN CLASES OF PRODUCERS - PRODUCTS COMING FROM OTHER MEMBER STATES - EXTENSION OF TAX ADVANTAGES - CRITERIA

( EEC TREATY , FIRST AND SECOND PARAGRAPHS OF ART . 95 )

3 . TAX PROVISIONS - INTERNAL TAXATION - PRODUCTS IMPORTED FROM NON-MEMBER COUNTRIES - PROHIBITION OF DISCRIMINATION - ABSENCE OF ANY PROVISION IN THE EEC TREATY - POSSIBLE BASIS IN OTHER TREATIES

Summary

1 . ARTICLE 227 ( 2 ) OF THE EEC TREATY , INTERPRETED IN THE LIGHT OF ARTICLE 227 ( 1 ), MUST BE TAKEN TO MEAN THAT THE TAX PROVISIONS OF THE TREATY , IN PARTICULAR THE PROHIBITION OF DISCRIMINATION LAID DOWN IN ARTICLE 95 , APPLY TO GOODS COMING FROM THE FRENCH OVERSEAS DEPARTMENTS .

2 . WHERE NATIONAL TAX LEGISLATION FAVOURS CERTAIN CLASSES OF PRODUCERS OR THE PRODUCTION OF CERTAIN TYPES OF SPIRITS BY MEANS OF TAX EXEMPTIONS OR THE GRANT OF REDUCED RATES OF TAXATION , EVEN IF SUCH ADVANTAGES BENEFIT ONLY A SMALL PROPORTION OF DOMESTIC PRODUCTION OR ARE GRANTED FOR SPECIAL SOCIAL REASONS , THOSE ADVANTAGES MUST BE EXTENDED TO IMPORTED COMMUNITY SPIRITS WHICH FULFIL THE SAME CONDITIONS , TAKING INTO ACCOUNT THE CRITERIA WHICH UNDERLIE THE FIRST AND SECOND PARAGRAPHS OF ARTICLE 95 OF THE EEC TREATY .

3 . THE EEC TREATY DOES NOT INCLUDE ANY RULE PROHIBITING DISCRIMINATION IN THE APPLICATION OF INTERNAL TAXATION TO PRODUCTS IMPORTED FROM NON-MEMBER COUNTRIES , SUBJECT HOWEVER TO ANY TREATY PROVISIONS WHICH MAY BE IN FORCE BETWEEN THE COMMUNITY AND THE COUNTRY OF ORIGIN OF A GIVEN PRODUCT .

Parties

IN CASE 148/77

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FINANZGERICHT ( FINANCE COURT ) HAMBURG FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

H . HANSEN JUN . & O . C . BALLE GMBH & CO , HAVING ITS REGISTERED OFFICE IN FLENSBURG ,

AND

HAUPTZOLLAMT ( PRINCIPAL CUSTOMS OFFICE ) FLENSBURG ,

Subject of the case

ON THE INTERPRETATION OF ARTICLES 9 , 37 , 92 , 93 , 95 AND 227 OF THE EEC TREATY IN RELATION TO THE APPLICATION OF THE GERMAN GESETZ UBER DAS BRANNTWEINMONOPOL ( LAW ON THE SPIRITS MONOPOLY ) OF 8 APRIL 1922 ,

Grounds

1BY AN ORDER OF 24 OCTOBER 1977 WHICH WAS RECEIVED AT THE COURT ON 7 DECEMBER 1977 , THE FINANZGERICHT ( FINANCE COURT ) HAMBURG REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY FIVE QUESTIONS ON THE INTERPRETATION OF ARTICLES 9 , 37 , 92 TO 94 , 95 AND 227 ( 2 ) OF THE EEC TREATY IN RELATION TO THE SYSTEM OF TAXATION APPLICABLE TO CERTAIN IMPORTED SPIRITS .

2IT APPEARS FROM THE CASE FILE THAT IN 1974 THE PLAINTIFF IN THE MAIN ACTION MARKETED SPIRITS OF VARIOUS ORIGINS , EITHER UNPROCESSED OR AS COUPAGES MADE FROM BOTH HOME-PRODUCED SPIRITS AND PRODUCTS FROM GUADELOUPE , SURINAM , JAMAICA AND INDONESIA .

3A DISPUTE AROSE BETWEEN THE PLAINTIFF AND THE TAX ADMINISTRATION CONCERNING THE RATE OF TAXATION APPLICABLE TO THE VARIOUS SPIRITS : THE ADMINISTRATION ASSESSED THEM AT THE ORDINARY RATE , WHEREAS THE PLAINTIFF CLAIMS THAT THE IMPORTED SPIRITS SHOULD BE ASSESSED AT THE MINIMUM RATE OF TAX WHICH UNDER ARTICLE 79 ( 2 ) OF THE BRANNTWEINMONOPOLGESETZ ( LAW ON THE SPIRITS MONOPOLY ) IS RESTRICTED BY GERMAN LAW TO CERTAIN TYPES OF PRODUCTS , IN PARTICULAR SPIRITS MADE FROM FRUIT , AND TO CERTAIN CLASSES OF DISTILLERIES SUCH AS ABFINDUNGSBRENNEREIEN ( DISTILLERIES FOR WHICH PRODUCTION IS ESTIMATED AT A STANDARD LEVEL FOR TAX PURPOSES ), VERSCHLUSSKLEINBRENNEREIEN ( SMALL ' ' BONDED ' ' DISTILLERIES ) AND OBSTGEMEINSCHAFTSBRENNEREIEN ( COLLECTIVE FRUIT FARM DISTILLERIES ).

4TAKING THE VIEW THAT THE SPIRITS WHICH IT HAD IMPORTED WERE ENTITLED TO THE SAME TAX ADVANTAGES , THE PLAINTIFF IN THE MAIN ACTION BROUGHT PROCEEDINGS BEFORE THE FINANZGERICHT HAMBURG , WHICH HAS ASKED THE FOLLOWING QUESTIONS IN ORDER TO REACH A DECISION ON THE CASE :

1 . IS ARTICLE 227 ( 2 ) OF THE EEC TREATY , UNDER WHICH THE GENERAL AND PARTICULAR PROVISIONS OF THE TREATY RELATING TO THE FREE MOVEMENT OF GOODS SHALL APPLY WITH REGARD TO THE FRENCH OVERSEAS DEPARTMENTS , TO BE INTERPRETED AS MEANING THAT THE SAID PROVISIONS ALSO INCLUDE THE TAX PROVISIONS IN PART 3 , TITLE I , CHAPTER 2 OF THE EEC TREATY , IN PARTICULAR ARTICLE 95 , OR DO THE PROVISIONS RELATING TO THE FREE MOVEMENT OF GOODS WITHIN THE MEANING OF ARTICLE 227 ( 2 ) ONLY INCLUDE THE PROVISIONS IN PART 2 , TITLE I?

2 . ARE ARTICLE 37 OF THE EEC TREATY , AND WHERE NECESSARY , IF ARTICLE 95 OF THE EEC TREATY IS APPLICABLE TO TRADE WITH THE FRENCH OVERSEAS DEPARTMENTS , THE LAST MENTIONED PROVISION , TO BE INTERPRETED AS MEANING THAT GOODS FROM MEMBER STATES OR FROM THE FRENCH OVERSEAS DEPARTMENTS MAY NOT BE MADE SUBJECT TO CHARGES ON IMPORTATION IN THE FORM OF TAXES ON CONSUMPTION WHICH ARE IN EXCESS OF THOSE BORNE BY THE SAME , SIMILAR OR SUBSTITUTABLE HOME-PRODUCED GOODS AT THE LOWEST RATE OF CHARGE EVEN IF THE LOWEST RATE OF CHARGE IS APPLICABLE ONLY TO A SMALL PROPORTION OF DOMESTIC PRODUCTION AND FOR SPECIAL SOCIAL REASONS?

3 . CAN A REDUCTION OF THE BURDEN OF CHARGES ON A PROPORTION OF NATIONAL PRODUCTION CONSTITUTE A STATE AID WHICH FALLS UNDER THE PROVISIONS OF ARTICLES 92 TO 94 OF THE EEC TREATY OR BY WHAT CRITERIA ARE STATE AIDS WITHIN THE MEANING OF ARTICLE 92 OF THE EEC TREATY TO BE DISTINGUISHED FROM REDUCTIONS IN CHARGES WHOSE COMPATIBILITY WITH THE TREATY MUST BE ASSESSED UNDER THE TAX PROVISIONS IN ARTICLE 95 AND POSSIBLY ALSO UNDER THE PROVISIONS CONCERNING STATE MONOPOLIES OF A COMMERCIAL CHARACTER UNDER ARTICLE 37?

4 . IF THE BURDEN OF CHARGES ON IMPORTATION OF GOODS IMPORTED FROM MEMBER STATES OR ALSO FROM THE TERRITORIES MENTIONED IN ARTICLE 227 ( 2 ) OF THE EEC TREATY MUST NOT BE IN EXCESS OF THE LOWEST CHARGE FOR THE SAME , SIMILAR OR SUBSTITUTABLE HOME-PRODUCED GOODS , MUST THE CONCEPT OF A CHARGE HAVING AN EFFECT EQUIVALENT TO A CUSTOMS DUTY USED IN ARTICLE 9 OF THE EEC TREATY BE INTERPRETED AS ALSO INCLUDING CONSUMER TAXES IF TAXES ON CONSUMPTION ARE LEVIED ON IMPORTS FROM NON-MEMBER COUNTRIES IN EXCESS OF THOSE ON IMPORTS OF THE SAME , SIMILAR OR SUBSTITUTABLE GOODS FROM MEMBER STATES OR FROM THE TERRITORIES MENTIONED IN ARTICLE 227 ( 2 ) OF THE EEC TREATY?

5 . IF QUESTION 4 IS ANSWERED IN THE AFFIRMATIVE :

MUST ARTICLE 9 OF THE EEC TREATY IN CONJUNCTION WITH REGULATION ( EEC ) NO 950/68 AND ARTICLE 189 OF THE EEC TREATY BE INTERPRETED AS MEANING THAT AFTER 1 JULY 1968 THE MEMBER STATES CANNOT INTRODUCE ANY CHARGES HAVING AN EFFECT EQUIVALENT TO A CUSTOMS DUTY WHICH WOULD LEAD TO A CHARGE ON GOODS IMPORTED FROM NON-MEMBER COUNTRIES WHICH IS IN EXCESS OF THAT BORNE BY THE SAME , SIMILAR OR SUBSTITUTABLE GOODS FROM MEMBER STATES OR FROM THE TERRITORIES MENTIONED IN ARTICLE 227 ( 2 ) OF THE EEC TREATY?

QUESTION 1 ( APPLICATION OF THE TAX PROVISIONS OF THE TREATY TO THE FRENCH OVERSEAS DEPARTMENTS )

5SINCE SOME OF THE SPIRITS IN QUESTION WERE IMPORTED FROM GUADELOUPE , A FRENCH OVERSEAS DEPARTMENT , THE FINANZGERICHT ASKS WHETHER THE TAX PROVISIONS OF THE TREATY , IN PARTICULAR THE RULE ON NON-DISCRIMINATION LAID DOWN IN ARTICLE 95 , APPLY TO THOSE PRODUCTS .

DOUBT ON THIS POINT ARISES FROM THE FACT THAT ARTICLE 227 ( 2 ) OF THE TREATY PROVIDES THAT CERTAIN STATED GROUPS OF PROVISIONS SHALL APPLY TO THE FRENCH OVERSEAS DEPARTMENTS , AND THE TAX PROVISIONS ARE NOT MENTIONED IN THAT LIST .

6IT APPEARS FROM THE CASE FILE THAT THE PLAINTIFF IN THE MAIN ACTION SOUGHT TO BASE ITS CLAIM PRIMARILY ON THE PROHIBITION OF DISCRIMINATION LAID DOWN IN ARTICLE 95 , WHICH IT CONSIDERS TO APPLY TO THE FRENCH OVERSEAS DEPARTMENTS .

7THE OPINIONS EXPRESSED ON THIS POINT IN THE COURSE OF THE PROCEEDINGS BY THE COMMISSION ON THE ONE HAND AND THE GOVERNMENT OF THE FRENCH REPUBLIC ON THE OTHER ARE CONTRADICTORY .

ACCORDING TO THE COMMISSION , THE TAX PROVISIONS OF THE TREATY ARE NOT APPLICABLE TO THE FRENCH OVERSEAS DEPARTMENTS , BECAUSE THEY ARE NOT EXPRESSLY REFERRED TO IN ARTICLE 227 ( 2 ) AND HAVE NOT BEEN DECLARED APPLICABLE BY ANY SUBSEQUENT INSTRUMENT .

ON THE OTHER HAND , THE FRENCH GOVERNMENT EXPRESSED THE OPINION THAT THE FRENCH OVERSEAS DEPARTMENTS BELONG TO THE COMMUNITY INASMUCH AS THEY ARE AN INTEGRAL PART OF THE FRENCH REPUBLIC , AND THAT CONSEQUENTLY ALL THE PROVISIONS OF THE TREATY APPLY TO THEM AUTOMATICALLY , SAVE AS OTHERWISE PROVIDED IN ANY SPECIAL PROVISIONS ADOPTED WHERE NECESSARY BY THE COUNCIL IN ORDER TO ALLOW FOR THEIR SPECIAL NATURE , WHICH IS ACKNOWLEDGED IN THE TREATY .

THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY DID NOT ADOPT ANY POSITION ON THIS QUESTION OF PRINCIPLE , BUT EXPRESSED THE VIEW THAT IN ANY CASE ARTICLE 95 IS APPLICABLE AS BEING THE NECESSARY COMPLEMENT TO THE PROVISIONS ON THE ELIMINATION OF CUSTOMS DUTIES AND CHARGES HAVING EQUIVALENT EFFECT .

8ARTICLE 227 ( 1 ) PROVIDES THAT THE TREATY SHALL APPLY TO THE ' ' FRENCH REPUBLIC ' ' IN ITS ENTIRETY .

THE SPECIAL POSITION OF THE FRENCH OVERSEAS DEPARTMENTS IS DEALT WITH IN THE FOLLOWING TERMS BY ARTICLE 227 ( 2 ):

' ' WITH REGARD TO . . . THE FRENCH OVERSEAS DEPARTMENTS , THE GENERAL AND PARTICULAR PROVISIONS OF THIS TREATY RELATING TO :

- THE FREE MOVEMENT OF GOODS ;

- AGRICULTURE , SAVE FOR ARTICLE 40 ( 4 );

- THE LIBERALIZATION OF SERVICES ;

- THE RULES ON COMPETITION ;

- THE PROTECTIVE MEASURES PROVIDED FOR IN ARTICLES 108 , 109 AND 226 ;

- THE INSTITUTIONS ,

SHALL APPLY AS SOON AS THIS TREATY ENTERS INTO FORCE .

THE CONDITIONS UNDER WHICH THE OTHER PROVISIONS OF THIS TREATY ARE TO APPLY SHALL BE DETERMINED , WITHIN TWO YEARS OF THE ENTRY INTO FORCE OF THIS TREATY , BY DECISIONS OF THE COUNCIL , ACTING UNANIMOUSLY ON A PROPOSAL FROM THE COMMISSION .

THE INSTITUTIONS OF THE COMMUNITY WILL , WITHIN THE FRAMEWORK OF THE PROCEDURES PROVIDED FOR IN THIS TREATY , IN PARTICULAR ARTICLE 226 , TAKE CARE THAT THE ECONOMIC AND SOCIAL DEVELOPMENT OF THESE AREAS IS MADE POSSIBLE . ' '

9THE LEGISLATIVE PRACTICE OF THE COMMUNITY SHOWS THAT , EXCEPT FOR A FEW ISOLATED PROVISIONS , THE COUNCIL HAS NOT MADE USE OF THE POWER CONFERRED IN THE SECOND SUBPARAGRAPH OF ARTICLE 227 ( 2 ).

ON THE OTHER HAND , MANY SPECIAL PROVISIONS HAVE SUBSEQUENTLY BEEN ADOPTED IN FAVOUR OF THE FRENCH OVERSEAS DEPARTMENTS IN THE CONTEXT OF LEGISLATION ON THE MOST DIVERSE SUBJECTS , BUT NONE OF THAT LEGISLATION REFERS TO THE TAX PROVISIONS .

THE QUESTION RAISED BY THE NATIONAL COURT IS TO BE ANSWERED IN THE LIGHT OF THESE FACTUAL AND LEGAL CONSIDERATIONS .

10IT FOLLOWS FROM ARTICLE 227 ( 1 ) THAT THE STATUS OF THE FRENCH OVERSEAS DEPARTMENTS WITHIN THE COMMUNITY IS PRIMARILY DEFINED BY REFERENCE TO THE FRENCH CONSTITUTION UNDER WHICH , AS THE FRENCH GOVERNMENT HAS STATED , THE OVERSEAS DEPARTMENTS ARE AN INTEGRAL PART OF THE REPUBLIC .

HOWEVER , IN ORDER TO MAKE DUE ALLOWANCE FOR THE SPECIAL GEOGRAPHIC , ECONOMIC AND SOCIAL SITUATION OF THOSE DEPARTMENTS , ARTICLE 227 ( 2 ) MADE PROVISION FOR THE TREATY TO BE APPLIED BY STAGES , AND IN ADDITION IT MADE AVAILABLE THE WIDEST POWERS FOR THE ADOPTION OF SPECIAL PROVISIONS COMMENSURATE TO THE SPECIFIC REQUIREMENTS OF THOSE PARTS OF THE FRENCH TERRITORIES .

11FOR THAT PURPOSE , ARTICLE 227 PRECISELY STATED CERTAIN CHAPTERS AND ARTICLES WHICH WERE TO APPLY AS SOON AS THE TREATY ENTERED INTO FORCE , WHILE AT THE SAME TIME RESERVING A PERIOD OF TWO YEARS WITHIN WHICH THE COUNCIL COULD DETERMINE SPECIAL CONDITIONS UNDER WHICH OTHER GROUPS OF PROVISIONS WERE TO APPLY .

THEREFORE AFTER THE EXPIRY OF THAT PERIOD , THE PROVISIONS OF THE TREATY AND OF SECONDARY LAW MUST APPLY AUTOMATICALLY TO THE FRENCH OVERSEAS DEPARTMENTS INASMUCH AS THEY ARE AN INTEGRAL PART OF THE FRENCH REPUBLIC , IT BEING UNDERSTOOD , HOWEVER , THAT IT ALWAYS REMAINS POSSIBLE SUBSEQUENTLY TO ADOPT SPECIFIC MEASURES IN ORDER TO MEET THE NEEDS OF THOSE TERRITORIES .

IT FOLLOWS FROM THESE CONSIDERATIONS THAT ARTICLE 95 APPLIES TO THE TAX TREATMENT OF PRODUCTS COMING FROM THE FRENCH OVERSEAS DEPARTMENTS .

12THEREFORE THE ANSWER TO QUESTION 1 SHOULD BE THAT ARTICLE 227 ( 2 ) OF THE EEC TREATY , INTERPRETED IN THE LIGHT OF ARTICLE 227 ( 1 ), MUST BE TAKEN TO MEAN THAT THE TAX PROVISIONS OF THE TREATY , IN PARTICULAR THE PROHIBITION OF DISCRIMINATION LAID DOWN IN ARTICLE 95 , APPLY TO GOODS COMING FROM THE FRENCH OVERSEAS DEPARTMENTS .

QUESTIONS 2 AND 3 ( TREATMENT OF SPIRITS COMING FROM WITHIN THE COMMUNITY IN RELATION TO ARTICLES 37 , 92 TO 94 AND 95 OF THE TREATY )

13BY QUESTIONS 2 AND 3 THE FINANZGERICHT SEEKS TO OBTAIN AT THE SAME TIME GUIDANCE ON THE INTERPRETATION OF ARTICLE 37 RELATING TO STATE MONOPOLIES OF A COMMERCIAL CHARACTER , OF ARTICLES 92 TO 94 RELATING TO THE ARRANGEMENTS FOR AID AND OF ARTICLE 95 RELATING TO THE NON-DISCRIMINATORY APPLICATION OF INTERNAL TAXATION , IN ORDER TO BE ABLE TO ASSESS THE COMPATIBILITY WITH THE TREATY OF THE PROVISIONS OF NATIONAL LAW IN FAVOUR OF CERTAIN TYPES OF SPIRITS OR CERTAIN CLASSES OF PRODUCERS AND TO DEDUCE FROM SUCH ASSESSMENT THE REQUISITE CONSEQUENCES FOR THE TAX TREATMENT OF IMPORTED SPIRITS COMING FROM WITHIN THE COMMUNITY .

14IT EMERGES FROM A COMPARATIVE STUDY SUPPLIED BY THE COMMISSION AT THE REQUEST OF THE COURT THAT PREFERENTIAL ARRANGEMENTS COMPARABLE TO THOSE CONTAINED IN ARTICLE 79 OF THE BRANNTWEINMONOPOLGESETZ EXIST IN SEVERAL MEMBER STATES , ALBEIT IN WIDELY VARYING FORMS .

IT APPEARS FROM THE SAME STUDY THAT SUCH ARRANGEMENTS CAN EXIST INDEPENDENTLY OF ANY CONNEXION WITH A COMMERCIAL MONOPOLY , WITHIN THE FRAMEWORK OF LEGISLATION OF A PURELY FISCAL CHARACTER .

ACCORDINGLY , IT APPEARS PREFERABLE TO EXAMINE THE PROBLEM RAISED BY THE NATIONAL COURT PRIMARILY FROM THE POINT OF VIEW OF THE RULE ON TAXATION LAID DOWN IN ARTICLE 95 , BECAUSE IT IS OF A GENERAL NATURE , AND NOT FROM THE POINT OF VIEW OF ARTICLE 37 , WHICH IS SPECIFIC TO ARRANGEMENTS FOR STATE MONOPOLIES .

THIS APPROACH IS FURTHER JUSTIFIED BY THE FACT THAT ARTICLE 37 IS BASED ON THE SAME PRINCIPLE AS ARTICLE 95 , THAT IS THE ELIMINATION OF ALL DISCRIMINATION IN TRADE BETWEEN MEMBER STATES .

IT ALSO APPEARS PREFERABLE TO CONSIDER THE QUESTION RAISED BY THE NATIONAL COURT FROM THE POINT OF VIEW OF ARTICLE 95 RATHER THAN IN THE LIGHT OF THE PROVISIONS ON AID CONTAINED IN ARTICLES 92 TO 94 , SINCE THE LATTER ALSO REST ON THE SAME BASIC IDEA AS ARTICLE 95 , NAMELY THE ELIMINATION OF STATE INTERVENTIONS - INCLUDING TAX ABATEMENTS - WHICH MIGHT HAVE THE EFFECT OF DISTORTING THE NORMAL CONDITIONS OF TRADE BETWEEN MEMBER STATES .

15FROM THE POINT OF VIEW OF ARTICLE 95 , THE QUESTIONS ASKED BY THE FINANZGERICHT ARE ESSENTIALLY INTENDED TO ASCERTAIN WHETHER AND , IF APPROPRIATE , IN WHAT CIRCUMSTANCES IMPORTED SPIRITS MAY ENJOY PREFERENTIAL TREATMENT RESERVED BY NATIONAL TAX LEGISLATION TO CERTAIN TYPES OF PRODUCTS OR CERTAIN CLASSES OF PRODUCERS .

16AT THE PRESENT STAGE OF ITS DEVELOPMENT AND IN THE ABSENCE OF ANY UNIFICATION OR HARMONIZATION OF THE RELEVANT PROVISIONS , COMMUNITY LAW DOES NOT PROHIBIT MEMBER STATES FROM GRANTING TAX ADVANTAGES , IN THE FORM OF EXEMPTION FROM OR REDUCTION OF DUTIES , TO CERTAIN TYPES OF SPIRITS OR TO CERTAIN CLASSES OF PRODUCERS .

INDEED , TAX ADVANTAGES OF THIS KIND MAY SERVE LEGITIMATE ECONOMIC OR SOCIAL PURPOSES , SUCH AS THE USE OF CERTAIN RAW MATERIALS BY THE DISTILLING INDUSTRY , THE CONTINUED PRODUCTION OF PARTICULAR SPIRITS OF HIGH QUALITY , OR THE CONTINUANCE OF CERTAIN CLASSES OF UNDERTAKINGS SUCH AS AGRICULTURAL DISTILLERIES .

17HOWEVER , ACCORDING TO THE REQUIREMENTS OF ARTICLE 95 , SUCH PREFERENTIAL SYSTEMS MUST BE EXTENDED WITHOUT DISCRIMINATION TO SPIRITS COMING FROM OTHER MEMBER STATES .

IN THIS CONNEXION ARTICLE 95 DOES NOT ALLOW ANY DISTINCTION TO BE DRAWN EITHER ACCORDING TO THE REASONS , WHETHER SOCIAL OR OTHERWISE , FOR THOSE SPECIAL SYSTEMS , OR ACCORDING TO THE RELATIVE IMPORTANCE OF SUCH SYSTEMS AS COMPARED WITH THE ORDINARY TAXATION SYSTEM .

18DIFFICULT PROBLEMS REGARDING SIMILAR TREATMENT CAN ARISE IN THIS CONTEXT IN VIEW OF THE ELEMENTS TO WHICH THE LEGISLATION OF THE DIFFERENT MEMBER STATES HAS LINKED THE GRANTING OF THE TAX ADVANTAGES CONCERNED , SUCH AS THE NATURE OF THE RAW MATERIALS , THE TECHNICAL CHARACTERISTICS OF THE EQUIPMENT , THE DISTILLING PROCESSES , THE TAXATION PROCEDURE AND THE METHODS OF FISCAL CONTROL .

THESE DIFFICULTIES ARE PARTICULARLY CONSPICUOUS IN A CASE SUCH AS THE PRESENT ONE , WHICH CONCERNS A PRODUCT - RUM - WHICH COMES FROM OUTSIDE THE EUROPEAN CLIMATIC ZONE .

19WITH REGARD TO THESE DIFFICULTIES OF COMPARISON , IT MUST BE EMPHASIZED THAT THE FIRST PARAGRAPH OF ARTICLE 95 REFERS TO BOTH ' ' DIRECT ' ' AND ' ' INDIRECT ' ' DISCRIMINATION , AND THAT THE APPLICATION OF THAT PROVISION IS BASED NOT ON A STRICT REQUIREMENT THAT THE PRODUCTS SHOULD BE IDENTICAL BUT ON THEIR ' ' SIMILARITY ' ' .

FURTHERMORE , THE SECOND PARAGRAPH OF ARTICLE 95 PROHIBITS ANY SYSTEM OF INTERNAL TAXATION WHICH IS ' ' OF SUCH A NATURE AS TO AFFORD INDIRECT PROTECTION TO OTHER PRODUCTS ' ' .

IT FOLLOWS THAT THE SPECIAL ADVANTAGES PROVIDED BY NATIONAL LEGISLATION FOR CERTAIN TYPES OF SPIRITS OR CERTAIN CLASSES OF PRODUCERS COULD BE CLAIMED FOR IMPORTED COMMUNITY SPIRITS WHEREVER THE CRITERIA UNDERLYING THE FIRST AND SECOND PARAGRAPHS OF ARTICLE 95 ARE SATISFIED .

20THEREFORE THE ANSWER TO QUESTIONS 2 AND 3 SHOULD BE THAT WHERE NATIONAL TAX LEGISLATION FAVOURS CERTAIN CLASSES OF PRODUCERS OR THE PRODUCTION OF CERTAIN TYPES OF SPIRITS BY MEANS OF TAX EXEMPTIONS OR THE GRANT OF REDUCED RATES OF TAXATION , EVEN IF SUCH ADVANTAGES BENEFIT ONLY A SMALL PROPORTION OF DOMESTIC PRODUCTION OR ARE GRANTED FOR SPECIAL SOCIAL REASONS , THOSE ADVANTAGES MUST BE EXTENDED TO IMPORTED COMMUNITY SPIRITS WHICH FULFIL THE SAME CONDITIONS , TAKING INTO ACCOUNT THE CRITERIA WHICH UNDERLIE THE FIRST AND SECOND PARAGRAPHS OF ARTICLE 95 .

QUESTIONS 4 AND 5 ( TAX ARRANGEMENTS FOR SPIRITS COMING FROM NON-MEMBER COUNTRIES )

21QUESTIONS 4 AND 5 CONCERN THE TAXATION ARRANGEMENTS FOR SPIRITS COMING FROM NON-MEMBER COUNTRIES .

BY ITS REFERENCE TO ARTICLE 9 OF THE EEC TREATY AND REGULATION NO 950/68 OF THE COUNCIL OF 28 JUNE 1968 ON THE COMMON CUSTOMS TARIFF ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 275 ), THE FINANZGERICHT INDICATES THAT IT IS CONCERNED BY THE QUESTION WHETHER , ASSUMING THAT CERTAIN TAX ARRANGEMENTS WERE ACKNOWLEDGED TO BE DISCRIMINATORY IN RELATION TO IMPORTED GOODS , SUCH A DIFFERENCE OF TREATMENT WOULD FALL UNDER THE PROHIBITION ON CHARGES HAVING AN EFFECT EQUIVALENT TO CUSTOMS DUTIES OR WHETHER IT SHOULD BE REGARDED AS AN INCREASE IN THE COMMON CUSTOMS TARIFF DUTIES WHICH WOULD BE INCOMPATIBLE WITH THE UNIFORM NATURE OF THAT TARIFF .

22IN THIS CONNEXION IT MUST BE POINTED OUT , FIRST , THAT THE PURPOSE OF ARTICLE 9 OF THE TREATY IS ONLY TO PROHIBIT CHARGES HAVING AN EFFECT EQUIVALENT TO CUSTOMS DUTIES IN TRADE ' ' BETWEEN MEMBER STATES ' ' , SO THAT THAT PROVISION DOES NOT CONCERN THE IMPORTATION OF PRODUCTS FROM NON-MEMBER COUNTRIES , AND , SECONDLY , THAT SAVE IN EXCEPTIONAL CIRCUMSTANCES ONE AND THE SAME CHARGE TO TAX CANNOT BE CLASSIFIED BOTH AS INTERNAL TAXATION AND AS A CHARGE HAVING AN EFFECT EQUIVALENT TO A CUSTOMS DUTY ( JUDGMENT OF 18 JUNE 1975 IN CASE 94/74 IGAV ( 1975 ) ECR 699 , AND JUDGMENT OF 2 MARCH 1977 IN CASE 78/76 STEINIKE ( 1977 ) ECR 595 ).

IN THE LIGHT OF THESE OBSERVATIONS , THE QUESTIONS ASKED BY THE NATIONAL COURT MUST BE TAKEN AS ASKING IN FACT WHETHER , IN TRADE WITH NON-MEMBER COUNTRIES , THERE IS ANY RULE PROHIBITING FISCAL DISCRIMINATION ANALOGOUS TO THAT LAID DOWN IN ARTICLE 95 OF THE TREATY .

23FOR TRADE WITH NON-MEMBER COUNTRIES , AND AS FAR AS INTERNAL TAXATION IS CONCERNED , THE TREATY ITSELF DOES NOT INCLUDE ANY RULE SIMILAR TO THAT LAID DOWN IN ARTICLE 95 , WHICH APPLIES ONLY TO PRODUCTS COMING FROM THE MEMBER STATES .

ACCORDINGLY - SUBJECT TO THE PROVISIONS OF REGULATIONS OF WHICH THE APPLICATION IS NOT AT ISSUE HERE - THE ANSWER TO THE QUESTION RAISED BY THE NATIONAL COURT DEPENDS UPON THE STATE OF RELATIONS UNDER TREATIES , WHETHER MULTILATERAL OR BILATERAL , BETWEEN THE COMMUNITY AND THE VARIOUS NON- MEMBER COUNTRIES FALLING TO BE CONSIDERED .

24THEREFORE THE ANSWER TO QUESTIONS 4 AND 5 SHOULD BE THAT THE EEC TREATY DOES NOT INCLUDE ANY PROVISION PROHIBITING DISCRIMINATION IN THE APPLICATION OF INTERNAL TAXATION TO PRODUCTS IMPORTED FROM NON-MEMBER COUNTRIES , SUBJECT HOWEVER TO ANY TREATY PROVISIONS WHICH MAY BE IN FORCE BETWEEN THE COMMUNITY AND THE COUNTRY OF ORIGIN OF A GIVEN PRODUCT .

Decision on costs

COSTS

25THE COSTS INCURRED BY THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY AND BY THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAVE SUBMITTED 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 HAMBURG , COSTS ARE A MATTER FOR THAT COURT .

Operative part

ON THOSE GROUNDS ,

THE COURT

IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE FINANZGERICHT HAMBURG BY AN ORDER OF 24 OCTOBER 1977 , HEREBY RULES :

1 . ARTICLE 227 ( 2 ) OF THE EEC TREATY , INTERPRETED IN THE LIGHT OF ARTICLE 227 ( 1 ), MUST BE TAKEN TO MEAN THAT THE TAX PROVISIONS OF THE TREATY , IN PARTICULAR THE PROHIBITION OF DISCRIMINATION LAID DOWN IN ARTICLE 95 , APPLY TO GOODS COMING FROM THE FRENCH OVERSEAS DEPARTMENTS .

2 . WHERE NATIONAL TAX LEGISLATION FAVOURS CERTAIN CLASSES OF PRODUCERS OR THE PRODUCTION OF CERTAIN TYPES OF SPIRITS BY MEANS OF TAX EXEMPTIONS OR THE GRANT OF REDUCED RATES OF TAXATION , EVEN IF SUCH ADVANTAGES BENEFIT ONLY A SMALL PROPORTION OF DOMESTIC PRODUCTION OR ARE GRANTED FOR SPECIAL SOCIAL REASONS , THOSE ADVANTAGES MUST BE EXTENDED TO IMPORTED COMMUNITY SPIRITS WHICH FULFIL THE SAME CONDITIONS , TAKING INTO ACCOUNT THE CRITERIA WHICH UNDERLIE THE FIRST AND SECOND PARAGRAPHS OF ARTICLE 95 OF THE EEC TREATY .

3 . THE EEC TREATY DOES NOT INCLUDE ANY PROVISION PROHIBITING DISCRIMINATION IN THE APPLICATION OF INTERNAL TAXATION TO PRODUCTS IMPORTED FROM NON-MEMBER COUNTRIES , SUBJECT HOWEVER TO ANY TREATY PROVISIONS WHICH MAY BE IN FORCE BETWEEN THE COMMUNITY AND THE COUNTRY OF ORIGIN OF A GIVEN PRODUCT .