Judgment of the Court of 27 February 1980. - Commission of the European Communities v Ireland. - Taxation of alcohol. - Case 55/79.



European Court reports 1980 Page 00481

Greek special edition Page 00249



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

1 . TAX PROVISIONS - INTERNAL TAXES - DISCRIMINATION - CRITERIA - ACTUAL EFFECT OF TAXATION BORNE BY NATIONAL PRODUCTS AND IMPORTED PRODUCTS RESPECTIVELY - CRITERIA

( EEC TREATY , FIRST PARAGRAPH OF ART . 95 )

2 . TAX PROVISIONS - INTERNAL TAXES - DISCRIMINATORY TAXATION - JUSTIFICATION - INAPPROPRIATE EXCHANGE RATE FOR NATIONAL CURRENCY - NOT PERMISSIBLE

( EEC TREATY , ART . 95 )

3 . TAX PROVISIONS - INTERNAL TAXES - HARMONIZATION OF LAWS - PRELIMINARY CONDITION FOR APPLICATION OF ARTICLE 95 OF THE TREATY - NONE

( EEC TREATY , ARTS . 95 , 99 AND 100 )

Summary

1 . IT IS NECESSARY , FOR THE PURPOSES OF THE APPLICATION OF THE PROHIBITION ON DISCRIMINATION LAID DOWN IN ARTICLE 95 OF THE EEC TREATY , TO TAKE INTO CONSIDERATION , NOT ONLY THE RATE OF TAX , BUT ALSO THE PROVISIONS RELATING TO THE BASIS OF ASSESSMENT AND THE DETAILED RULES FOR LEVYING THE VARIOUS DUTIES . IN FACT THE DECISIVE CRITERION OF COMPARISON FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 95 IS THE ACTUAL EFFECT OF EACH TAX ON NATIONAL PRODUCTION ON THE ONE HAND AND ON IMPORTED PRODUCTS ON THE OTHER , SINCE EVEN WHERE THE RATE OF TAX IS EQUAL , THE EFFECT OF THAT TAX MAY VARY ACCORDING TO THE DETAILED RULES FOR THE BASIS OF ASSESSMENT AND LEVYING THEREOF APPLIED TO NATIONAL PRODUCTION AND IMPORTED PRODUCTS RESPECTIVELY .

2 . IF A MEMBER STATE CONSIDERS THAT THE DIFFERENCE BETWEEN THE EXCHANGE RATES FOR ITS CURRENCY AND THAT OF ANOTHER MEMBER STATE HAVE NOT BEEN FIXED APPROPRIATELY , IT SHOULD SEEK THE REMEDY FOR THAT SITUATION BY THE APPROPRIATE MEANS . IT IS NOT ENTITLED ITSELF TO CORRECT SUCH A MONETARY SITUATION BY MEANS OF DISCRIMINATORY TAX PROVISIONS CONTRARY TO ARTICLE 95 OF THE EEC TREATY .

3 . ALTHOUGH OBSTACLES TO THE FREE MOVEMENT OF GOODS MAY BE ELIMINATED BY APPLYING THE PROCEDURE FOR THE HARMONIZATION OF TAX LEGISLATION UNDER ARTICLES 99 AND 100 OF THE TREATY THE IMPLEMENTATION OF THOSE PROVISIONS AND PARTICULARLY OF ARTICLE 99 CANNOT BE PUT FORWARD AS A CONDITION FOR THE APPLICATION OF ARTICLE 95 , WHICH IMPOSES ON MEMBER STATES WITH IMMEDIATE EFFECT THE DUTY TO APPLY THEIR TAX LEGISLATION WITHOUT DISCRIMINATION EVEN BEFORE THERE IS ANY HARMONIZATION .

Parties

IN CASE 55/79

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , ANTHONY MCCLELLAN , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ITS LEGAL ADVISER , MARIO CERVINO , JEAN MONNET BUILDING , KIRCHBERG ,

APPLICANT ,

V

IRELAND , REPRESENTED BY LOUIS J . DOCKERY , CHIEF STATE SOLICITOR , ACTING AS AGENT , ASSISTED BY NIAL FENNELLY , S.C ., WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE IRISH EMBASSY ,

DEFENDANT ,

Subject of the case

APPLICATION FOR A DECLARATION THAT BY MAINTAINING IN FORCE THE NATIONAL PROVISIONS AND PRACTICES RELATING TO THE LEVYING OF EXCISE DUTIES ON SPIRITS , BEER AND MADE WINE , IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OR ARTICLE 30 OF THE EEC TREATY ,

Grounds

1 BY APPLICATION OF 9 APRIL 1979 , THE COMMISSION BROUGHT PROCEEDINGS UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT , BY THE DISCRIMINATORY APPLICATION OF PROVISIONS RELATING TO THE DEFERMENT OF PAYMENT OF EXCISE DUTY ON SPIRITS , BEER AND MADE WINE , IRELAND IS IN BREACH OF THE FIRST PARAGRAPH OF ARTICLE 95 OR , ALTERNATIVELY , ARTICLE 30 OF THE EEC TREATY .

2 THE FACTS WHICH GAVE RISE TO THE ACTION ARE NOT CONTESTED BY IRELAND . IT IS IN FACT COMMON GROUND THAT THE LEGAL PROVISIONS APPLICABLE IN IRELAND , IN PARTICULAR PURSUANT TO THE IMPOSITION OF DUTIES ( NO 221 ) ( EXCISE DUTIES ) ORDER 1975 , PROVIDE IN FAVOUR OF PRODUCERS OF SPIRITS , BEER AND MADE WINE FOR DEFERMENT OF PAYMENT OF BETWEEN FOUR AND SIX WEEKS ACCORDING TO THE PRODUCT WHEREAS , IN THE CASE OF THE SAME PRODUCTS FROM OTHER MEMBER STATES , THE DUTY IS PAYABLE EITHER AT THE DATE OF IMPORTATION OR OF DELIVERY FROM THE CUSTOMS WAREHOUSE .

3 THE COMMISSION ACKNOWLEDGES THAT THERE IS NO DISCRIMINATION AS REGARDS THE RATES OF DUTY APPLICABLE . ON THE OTHER HAND , IT CONSIDERS THAT THE FACT THAT IRISH PRODUCTS ARE GRANTED DEFERMENT OF PAYMENT BEYOND THE DATE ON WHICH THE PRODUCTS ARE PUT ON THE MARKET AMOUNTS TO CONFERRING ON NATIONAL PRODUCERS A FINANCIAL BENEFIT IN COMPARISON WITH IMPORTERS WHO ARE OBLIGED TO PAY THE DUTY ON THE ACTUAL DATE ON WHICH THE PRODUCTS ARE RELEASED TO THE MARKET . THIS RESULTS , ACCORDING TO THE COMMISSION , IN A DISADVANTAGE TO IMPORTED PRODUCTS IN COMPETITION WITH THE CORRESPONDING IRISH NATIONAL PRODUCTION .

4 THE COMMISSION STATES THAT IT BROUGHT PROCEEDINGS UNDER ARTICLE 169 AS A RESULT OF THE COMPLAINTS RECEIVED FROM IMPORTERS WHO HAD UNSUCCESSFULLY REQUESTED THE IRISH AUTHORITIES TO GRANT THEM THE SAME DEFERRED PAYMENT FACILITIES AS IRISH PRODUCERS . AS A RESULT OF THE REPRESENTATIONS MADE BY THE COMMISSION IN THIS CONNEXION , THE IRISH AUTHORITIES EXPRESSED THEIR WILLINGNESS TO ABOLISH THIS DISCRIMINATION WITHIN THE CONTEXT OF THE HARMONIZATION OF TAX LEGISLATION BUT REFUSED TO AMEND THE PROVISIONS IN QUESTION IN THE IMMEDIATE FUTURE . AS A RESULT OF THAT REFUSAL THE COMMISSION BROUGHT THE MATTER BEFORE THE MATTER BEFORE THE COURT OF JUSTICE .

5 THE GOVERNMENT OF IRELAND CLAIMS IN ITS DEFENCE THAT THE DETAILED ARRANGEMENTS FOR LEVYING THE DUTY HAVE TO BE ADAPTABLE TO THE DIFFERENT CIRCUMSTANCES OF HOME-PRODUCED PRODUCTS AND IMPORTED PRODUCTS . IT STATES THAT THE DECISIVE CRITERION IS THE RATE OF DUTY APPLIED , WHILST THE WORDING OF ARTICLE 95 MERELY PROHIBITS THE MEMBER STATES FROM IMPOSING ON THE PRODUCTS OF OTHER MEMBER STATES TAXATION ' ' IN EXCESS ' ' OF THAT IMPOSED ON DOMESTIC PRODUCTS ; TO INTRODUCE FACTORS WHICH DO NOT APPEAR IN ITS WORDING IS TO DO VIOLENCE TO THAT PROVISION .

6 THE GOVERNMENT OF IRELAND RELIES IN ADDITION UPON THE FACT THAT IRISH PRODUCERS , AS CONSIDERATION FOR THE ADVANTAGE GIVEN THEM AS REGARDS DEFERMENT OF PAYMENT , MUST ACCEPT CORRESPONDING DISADVANTAGES . THUS , IN ORDER TO OBTAIN DEFERRED PAYMENT , THEY MUST PAY AN ADDITIONAL DUTY AND FURNISH THE AUTHORITIES WITH SECURITY FOR PAYMENT . IT STATES THAT IT IS NECESSARY MOREOVER TO TAKE INTO ACCOUNT THE DISADVANTAGE SUFFERED BY IRISH WHISKY PRODUCERS IN COMPETITION WITH SCOTCH WHISKY OWING TO THE DIVERGENT EXCHANGE RATES BETWEEN THE IRISH AND UNITED KINGDOM ' ' GREEN POUNDS ' ' .

7 FINALLY , THE GOVERNMENT OF IRELAND CLAIMS ONCE MORE THAT THE DISCRIMINATION COMPLAINED OF BY THE COMMISSION MUST BE ABOLISHED WITH THE THE CONTEXT OF THE HARMONIZATION OF TAX LEGISLATION AND THAT IT DOES NOT COME WITHIN THE SCOPE OF ARTICLE 95 .

8 THESE DEFENCES PUT FORWARD BY THE GOVERNMENT OF IRELAND CANNOT BE ACCEPTED . IN FACT , AS THE COURT OF JUSTICE HAS STATED IN AN ESTABLISHED LINE OF CASES ( SEE JUDGMENTS OF 5 MAY 1970 , COMMISSION OF THE EUROPEAN COMMUNITIES V KINGDOM OF BELGIUM , CASE 77/69 ( 1970 ) ECR 237 , 20 FEBRUARY 1973 FONDERIE OFFICINE RIUNITE FOR V VEREINIGTE KAMMGARN-SPINNEREIEN VKS , CASE 54/72 ( 1973 ) ECR 193 , 17 JANUARY 1976 , REWE - ZENTRALE DES LEBENSMITTEL-GROSSHANDELS GMBH V HAUPTZOLLAMT LANDAU-PFALZ , CASE 45/75 ( 1976)ECR 181 , 22 JUNE 1976 BOBIE GETRANKEVERTRIEB GMBH V HAUPTZOLLAMT AACHEN-NORD , CASE 127/75 ( 1976 ) ECR 1079 , 16 FEBRUARY 1977 SCHOTTLE & SOHNE GMBH V FINANZAMT FREUDENSTADT , CASE 20/76 ( 1977 ) ECR 247 , 22 MARCH 1977 , IANELLI & VOLPI S.P.A . V DITTA PAOLO MERONI , CASE 74/76 ( 1977 ) ECR 557 AND 22 MARCH 1977 , FIRMA STEINIKE & WEINLING V FEDERAL REPUBLIC OF GERMANY , CASE 78/76 ( 1977 ) ECR 595 ), IT IS NECESSARY , FOR THE PURPOSES OF THE APPLICATION OF THE PROHIBITION ON DISCRIMINATION LAID DOWN IN ARTICLE 95 , TO TAKE INTO CONSIDERATION THE PROVISIONS RELATING OT THE BASIS OF ASSESSMENT AND THE DETAILED RULES FOR LEVYING THE VARIOUS DUTIES IN ADDITION TO THE RATE OF TAX . IN FACT THE DECISIVE CRITERION OF COMPARISON FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 95 IS THE ACTUAL EFFECT OF EACH TAX ON NATIONAL PRODUCTION ON THE ONE HAND AND ON IMPORTED PRODUCTS ON THE OTHER , SINCE EVEN WHERE THE RATE OF TAX IS EQUAL THE EFFECT OF THAT TAX MAY VARY ACCORDING TO THE DETAILED RULES FOR THE BASIS OF ASSESSMENT AND LEVYING THEREOF APPLIED TO NATIONAL PRODUCTION AND IMPORTED PRODUCTS RESPECTIVELY .

9 SUCH IS THE CASE WITH THE DIFFERENCE IN TREATMENT APPLIED TO THE ALCOHOLIC BEVERAGES REFERRED TO IN THE APPLICATION ACCORDING TO WHETHER THOSE BEVERAGES ARE PRODUCED IN IRELAND OR IMPORTED FROM OTHER MEMBER STATES . ALTHOUGH THE BENEFIT RESERVED TO NATIONAL PRODUCTION IN THE FORM OF FACILITIES FOR DEFERRED PAYMENT IS SMALL , THE DISCRIMINATION AGAINST PRODUCTS IMPORTED FROM OTHER MEMBER STATES IS NONE THE LESS OBVIOUS .

10 AS THE COMMISSION HAS CORRECTLY STATED , THE FACT THAT IRISH PRODUCERS MAY ONLY BENEFIT FROM THE FACILITIES FOR DEFERRED PAYMENT BY PAYING ADDITIONAL DUTY AND FURNISHING FINANCIAL SECURITY DOES NOT REMOVE THAT DISCRIMINATION . THOSE TWO OBLIGATIONS ARE SO TRIFLING THAT THEIR EFFECT IS NOT TO COMPENSATE FOR THE BENEFIT RESERVED TO IRISH PRODUCERS . MOREOVER , THERE IS NOTHING TO PREVENT THE IRISH AUTHORITIES FROM IMPOSING THE SAME ADDITIONAL DUTY ON IMPORTERS AND FROM REQUIRING THE LATTER TO SUPPLY SIMILAR SECURITY .

11 SIMILARLY , THE ARGUMENT BASED ON THE DIFFERENCE IN THE RATE OF THE IRISH AND UNITED KINGDOM ' ' GREEN POUNDS ' ' MUST BE REJECTED . IF THE IRISH AUTHORITIES CONSIDER THAT THE EXCHANGE RATES IN QUESTION WERE NOT FIXED APPROPRIATELY , THEY SHOULD SEEK THE REMEDY FOR THAT SITUATION BY THE APPROPRIATE MEANS . A MONETARY SITUATION CANNOT BE CORRECTED BY MEANS OF DISCRIMINATORY TAX PROVISIONS .

12 FINALLY , IT IS NECESSARY TO REJECT THE ARGUMENT THAT DISCRIMINATION SUCH AS THAT WHICH FORMS THE SUBJECT-MATTER OF THE APPLICATION MUST BE ELIMINATED BY THE PROCEDURE FOR THE HARMONIZATION OF TAX LEGISLATION UNDER ARTICLES 99 AND 100 OF THE TREATY , RATHER THAN BY MEANS OF ARTICLE 95 . THERE IS NO DOUBT THAT OBSTACLES TO THE FREE MOVEMENT OF GOODS MAY BE ELIMINATED BY APPLYING THE PROCEDURE FOR THE HARMONIZATION OF TAX LEGISLATION , BUT THE IMPLEMENTATION OF THE PROVISIONS OF THE TREATY RELATING THERETO AND IN PARTICULAR OF ARTICLE 99 CANNOT BE POSED AS A CONDITION FOR THE APPLICATION OF ARTICLE 95 , WHICH IMPOSES ON MEMBER STATES WITH IMMEDIATE EFFECT THE DUTY TO APPLY THEIR TAX LEGISLATION WITHOUT DISCRIMINATION EVEN BEFORE THERE IS ANY HARMONIZATION .

13 IT IS APPROPRIATE HOWEVER TO POINT OUT THAT IN PARTICULAR AS REGARDS BEER MANUFACTURED IN IRELAND , WHERE THE EXCISE DUTY IS IMPOSED ON THE WORTS BEFORE MANUFACTURE , THE GRANT OF DEFERMENT OF PAYMENT CANNOT BE CONSIDERED AS DISCRIMINATORY IN SO FAR AS THAT DEFERMENT CORRESPONDS TO THE PERIOD DURING WHICH THE BEER MUST BE KEPT IN THE BREWERY IN ORDER TO MATURE . THE FINISHED PRODUCT IS THEREFORE ONLY IN A SITUATION SIMILAR TO THAT OF THE IMPORTED PRODUCT FROM THE DATE ON WHICH IT IS MARKETED .

14 IT FOLLOWS FROM THESE CONSIDERATIONS THAT , SUBJECT TO THE PRECEDING OBSERVATIONS , IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE FIRST PARAGRAPH OF ARTICLE 95 OF THE TREATY BY BRINGING INTO FORCE AND APPLYING TAX PROVISIONS THE EFFECT OF WHICH IS TO GRANT AS REGARDS EXCISE DUTY ON SPIRITS , BEER AND MADE WINE , BENEFITS TO IRISH PRODUCERS IN RESPECT OF DEFERMENT OF PAYMENT WHICH ARE REFUSED TO IMPORTERS OF THE SAME PRODUCTS FROM OTHER MEMBER STATES .

15 IN VIEW OF THIS CONCLUSION , IT IS UNNECESSARY TO EXAMINE THE COMMISSION ' S ALTERNATIVE CONCLUSIONS BASED ON THE APPLICATION OF ARTICLE 30 , WHICH CONCERNS THE ELIMINATION OF QUANTITATIVE RESTRICTIONS AND ALL MEASURES HAVING EQUIVALENT EFFECT .

Decision on costs

COSTS

16 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

17 SINCE THE DEFENDANT HAS FAILED IN ITS SUBMISSIONS , IT MUST BE ORDERED TO PAY THE COSTS .

Operative part

ON THOSE GROUNDS ,

THE COURT

HEREBY :

1 . DECLARES THAT BY THE DISCRIMINATORY APPLICATION TO PRODUCTS IMPORTED FROM OTHER MEMBER STATES OF PROVISIONS RELATING TO DEFERMENT OF PAYMENT OF EXCISE DUTY ON SPIRITS , BEER AND MADE-WINE , PURSUANT IN PARTICULAR TO THE IMPOSITION OF DUTIES ( NO 221 ) ( EXCISE DUTIES ) ORDER , 1975 , IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE FIRST PARAGRAPH OF ARTICLE 95 OF THE EEC TREATY .

2 . ORDERS IRELAND TO PAY THE COSTS .