1.

In April 1971 the Miritz undertaking, of Göttingen, withdrew from its bonded warehouse, to put into free circulation, a certain quantity of citrus peel distillates of Italian origin. It contained a concentrated extract of various aromatic substances in a solution of alcohol, classified under customs heading 33.04 II, which is used as raw material in the preparation of drinks covered by heading 22.06. On 18 May 1971, the Principal Customs Office in Göttingen ordered Miritz, in view of the alcoholic content of the goods, to pay the ‘equalization charge’ (Ausgleichsabgabe) introduced under the first paragraph of Article 1 of. the German Law of 23 December 1970 concerning the imposition of a special equalization charge on alcohol imports (Gesetz über die Erhebung einer besonderen Ausgleichsabgabe auf eingeführten Branntwein). The applicant contested the assessment before the Finanzgericht Hamburg on grounds based on both national and Community law. In its judgment of 28 July 1972, the court upheld the application on grounds based on national law. The Central Customs Office, Göttingen, thereupon appealed to the Bundesfinanzhof, contending that, under the Law of 23 December 1970, the imposition of the aforesaid equalization charge was perfectly legal under both national and Community law. In these circumstances, the highest court of the Federal Republic in taxation matters seeks a ruling from this court on the following points: 1. Does the introduction of a levy which is only imposed upon imports from other Member States of spirits and products containing alcohol and the amount of which corresponds to the total amount of charges falling, as a result of the Distilled Spirit Monopoly, upon similar domestic products, without such products' being expressly subjected to the same equalization charge, amount to an infringement of Article 12 of the Treaty establishing the European Economic Community? 2. If the answer to Question 1 be in the negative, does the imposition of the levy referred to under Question 1 above infringe Article 37 (2) of the Treaty establishing the European Economic Community? 3. If the answer to Question 1 or 2 be in the affirmative, is the imposition of the levy referred to under 1 above justified by Article 37 (4) of the Treaty establishing the European Economic Community? It appears from information supplied by the interveners, and especially by the German Government and the Commission that the charge in question, which is intended to compensate for the difference between the price of alcohol produced in the Federal Republic and the lower selling price fetched in other Member States, by no means corresponds, either in technical or economic terms, with the general levy imposed on similar domestic products. During the hearing the representative of the Federal Republic confirmed that, quite apart from the technical complications of the relevant machinery employed, the outcome is that the charge is always equal to the difference between the price paid by the monopoly to domestic producers, and the lower price paid in the exporting Member State. This charge recalls the ‘special import duty’ on gingerbread which was the subject of the judgment of this Court in Joined Cases 2 and 3/62, Commission v Grand Duchy of Luxembourg and Kingdom of Belgium [1962] ECR 425 and the ‘special charge’ on refrigerators which was the subject of the judgment of this Court in Case 13/63, Italy v Commission [1963] ECR 165. It is, therefore, to be distinguished from the charge involved in Case 45/75 (REWE), which is concerned with a direct levy to compensate for the fiscal charge imposed on domestic products and the working costs of the monopoly (Monopolausgleich) levied under the Law of 1922 whereas the charge under consideration in the present case constitutes an independent protective measure designed to compensate for the difference in prices between domestic and foreign products. Accordingly, since this Court did not consider it necessary to join these two cases, even for the purposes of oral procedure, I shall scrupulously refrain from confusing the issue, whilst giving full weight to the observations made recently by Mr Advocate-General Reischl in the REWE case and to those of Mr Advocate-General Dutheillet de Lamothe in Case 13/70, Cinzano ([1970] ECR 1098) on the very complicated structure of the monopoly, their analysis of which I cannot improve upon. I merely draw attention to the fact that, before entry into force of the Law of 23 December 1970, the German monopoly enjoyed the exclusive right to import into the Federal Republic ethyl alcohol and products containing it. Prior to entry into force of the Law, the function of the equalization charge was, accordingly, performed by this exclusive right, which amounted in practice to a prohibition of imports in the case of certain products. A Recommendation addressed by the Commission to the Federal Government on the day before the transitional period expired (JO L 31, 1970, p. 20) is to some extent linked with the Law. In the Recommendation, the Commission states that: ‘The unrestricted opening of the German market to products from other Member States before the establishment of a common organization of the markets could … be prejudicial to the sale of German ethyl alcohol derived from agricultural products as well as to the competitiveness of German spirits and as a consequence to the work and standard of living of producers of certain agricultural raw materials.’ In a reference to Article 37 (4), the recommendation declares that it might become necessary to adopt specific measures pending entry into force of the common organization of the markets and that it is permissible to levy an equalization charge on imports of alcohol and alcoholic drinks. In order to comply with it, the Federal Government of Germany opened its frontiers but nevertheless made imports of alcohol subject to payment of the charge, which, in the Commission's view, while certainly in theory permitting imports into the Federal Republic, in practice deprived the operation of any economic point. Finally, I must emphasize that the Law was adopted shortly after the judgment of this Court in the Cinzano case, referred to above, the operative part of which reads: ‘A duty levied on imports of products from other Member States linked to the existence of a State monopoly and applied for the first time after the entry into force of the Treaty does not amount to an infringement of Article 37 (2) as long as such new charge is imposed on the imported product only to the same extent as on domestic products affected by the monopoly’. Although it was the subject of a specific Law, the equalization charge with which we are concerned is, having regard to its structure and character, none the less linked to the monopoly system. And, in as much as the charge covers alcohol manufactured from agricultural products it forms part, like the monopoly, of a national market organization for the agricultural products concerned. Shortly before the expiry of the period laid down in Article 38 (3) of the Treaty, raw alcohol manufactured from agricultural products was, by Regulation No 7a of the Council of 18 December 1959, included in Annex II and was thus classified as an agricultural product within the meaning of Articles 38 and 46. It was in fact held by this Court in its judgment of 29 May 1974 in Case 185/73, Hauptzollamt Bielefeld v König [1974] ECR 617 that the validity of this regulation was not affected by the fact that its publication did not take place until more than a year after the expiry of the period in question.