Judgment of the Court of 4 April 1968. - Firma Milch-, Fett- und Eierkontor GmbH v Hauptzollamt Saarbrücken. - Reference for a preliminary ruling: Finanzgericht des Saarlandes - Germany. - Case 25-67.



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Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . POLICY OF THE EEC - COMMON RULES - TAX PROVISIONS - CUMULATIVE MULTI-STAGE TAX - AVERAGE RATES FOR IMPORTED PRODUCTS WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 97 - NO INDIVIDUAL RIGHTS

2 . POLICY OF THE EEC - COMMON RULES - TAX PROVISIONS - CUMULATIVE MULTI-STAGE TAX - AVERAGE RATES FOR IMPORTED PRODUCTS OR GROUPS OF IMPORTED PRODUCTS - ESTABLISHMENT BY MEMBER STATES - VALIDITY

( EEC TREATY, ARTICLE 97 )

3 . CUSTOMS DUTIES AND INTERNAL TAXATION - JOINT APPLICABILITY TO THE SAME CASE OF PROVISIONS RELATING THERETO - IMPOSSIBILITY OF SUCH JOINT APPLICATION

( EEC TREATY, ARTICLES 12, 13 AND 95 )

4 . POLICY OF THE EEC - COMMON RULES - TAX PROVISIONS - TAXATION INTENDED TO PUT NATIONAL PRODUCTS AND IMPORTED PRODUCTS IN A COMPARABLE TAX POSITION - NATURE OF INTERNAL TAXATION

( EEC TREATY, ARTICLE 95 )

Summary

1 . CF . PARAGRAPH 4, SUMMARY, CASE 28/67 . ( 1968 ) ECR 143 .

THE FIRST PARAGRAPH OF ARTICLE 97, WHICH APPLIES WHERE MEMBER STATES OPERATING A TURNOVER TAX ACCORDING TO A CUMULATIVE MULTI-STAGE TAX SYSTEM HAVE ACTUALLY EXERCISED THE RIGHT THEREIN GRANTED TO THEM, DOES NOT, IN THE PRESENT STATE OF COMMUNITY LAW, CREATE INDIVIDUAL RIGHTS WHICH NATIONAL COURTS MUST PROTECT . IT IS THEREFORE NOT FOR NATIONAL COURTS TO APPRAISE WHETHER AVERAGE RATES ESTABLISHED BY MEMBER STATES CONFORM TO THE PRINCIPLES OF ARTICLE 95 .

*/ 667J0028 /*.

2 . CF . PARAGRAPH 5, SUMMARY, CASE 28/67 . ( 1968 ) ECR 143 .

IN STATES WHICH HAVE EXERCISED THE POWER MADE AVAILABLE TO THEM BY ARTICLE 97, RATES ARE CONSIDERED AS 'AVERAGE RATES' IF THEY ARE ESTABLISHED AS SUCH BY THE STATES IN QUESTION, WITHOUT PREJUDICE TO THE OPERATION OF THE SECOND PARAGRAPH OF THAT ARTICLE .

*/ 667J0028 /*.

3 . CF . PARAGRAPH 4, SUMMARY, CASE 57/65, ( 1966 ) ECR 205 .

ARTICLES 12 AND 13, ON THE ONE HAND, AND ARTICLE 95 ON THE OTHER CANNOT BE APPLIED JOINTLY TO ONE AND THE SAME CASE .

*/ 665J0057 /*.

4 . A TAX WHICH IS LEVIED WITHIN THE FRAMEWORK OF TURNOVER TAX LEGISLATION AND IS DESIGNED TO PLACE ALL CATEGORIES OF PRODUCTS BOTH DOMESTIC AND IMPORTED IN A COMPARABLE TAX SITUATION CONSTITUTES ' INTERNAL TAXATION ' WITHIN THE MEANING OF ARTICLE 95 .

Parties

IN CASE 25/67

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY BY THE FINANZGERICHT ( FINANCE COURT ) ( THE COMPETENT COURT IN TAXATION MATTERS ) OF THE SAARLAND FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

FIRMA MILCH -, FETT - UND EIERKONTOR GMBH, HAMBURG,

AND

HAUPTZOLLAMT ( PRINCIPAL CUSTOMS OFFICE ) SAARBRUECKEN,

Subject of the case

ON THE INTERPRETATION OF ARTICLES 95 AND 97 OF THE EEC TREATY,

Grounds

P . 216

BY AN ORDER OF 19 JUNE 1967, RECEIVED AT THE COURT THE FOLLOWING 8 JULY, THE FINANZGERICHT OF THE SAARLAND UNDER ARTICLE 177 OF THE TREATY ESTABLISHING THE EEC, PUT TO THE COURT SEVERAL PRELIMINARY QUESTIONS CONCERNING THE INTERPRETATION OF ARTICLES 95 AND 97 OF THE SAID TREATY AS WELL AS ARTICLE 11 OF REGULATION NO 22 OF THE COUNCIL ON THE PROGRESSIVE ESTABLISHMENT OF A COMMON ORGANIZATION OF THE MARKET IN POULTRY MEAT . THE PURPOSE OF THE THIRD, FOURTH AND FIFTH QUESTIONS IS TO ESTABLISH WHETHER, AND IF SO IN WHAT CIRCUMSTANCES, ARTICLE 97 PRODUCES DIRECT EFFECTS AND CREATES INDIVIDUAL RIGHTS WHICH NATIONAL COURTS MUST PROTECT .

P . 217

IT APPEARS APPROPRIATE TO DEAL WITH THESE QUESTIONS FIRST AND THEN TO GO ON TO THE OTHERS .

I - THE EFFECTS OF ARTICLE 97 ( THIRD TO FIFTH QUESTIONS )

IN ITS THIRD QUESTION THE FINANZGERICHT OF THE SAARLAND ASKS THE COURT TO RULE WHETHER ARTICLE 97 ' IS AN INDEPENDENT LEGISLATIVE PROVISION OR A SPECIAL CASE OF ARTICLE 95 WHICH GOES NO FURTHER THAN ALTERING THE PROCEDURE BY WHICH THE COMMISSION IS TO ENSURE OBSERVANCE OF THE TREATY '.

THE FOURTH QUESTION SEEKS TO ESTABLISH WHETHER ' TO THE EXTENT TO WHICH ARTICLE 97 IS A SPECIAL CASE OF ARTICLE 95, THE NATIONAL COURT IS ENTITLED AND REQUIRED TO CONSIDER WHETHER THE TURNOVER EQUALIZATION TAX ' LEVIED ON IMPORTS FROM MEMBER STATES OF THE EEC ' IS COMPATIBLE WITH ARTICLE 95 OF THE EEC TREATY WHEN THE DISPUTED RATE OF TAX IS AN AVERAGE RATE WITHIN THE MEANING OF ARTICLE 97 '.

THE FIFTH QUESTION OF THE FINANZGERICHT SEEKS TO ESTABLISH WHETHER ' TO THE EXTENT TO WHICH ARTICLE 97 OF THE EEC TREATY IS AN INDEPENDENT LEGISLATIVE PROVISION, THE FIRST PARAGRAPH THEREOF PRODUCES DIRECT EFFECTS AND CREATES INDIVIDUAL RIGHTS WHICH NATIONAL COURTS ARE BOUND TO UPHOLD ' OR WHETHER ' ARTICLE 97 OF THE TREATY ONLY GIVES TO THE COMMISSION THE RIGHT TO ADDRESS APPROPRIATE DIRECTIVES OR DECISIONS TO THE STATE CONCERNED, IN ACCORDANCE WITH THE SECOND PARAGRAPH THEREOF '.

IT HAS BEEN SUGGESTED THAT THE COURT IN ITS JUDGMENT OF 16 JUNE 1966 IN CASE 57/65 HAS ALREADY DECIDED BY IMPLICATION IN FAVOUR OF THE DIRECT EFFECT OF ARTICLE 97 .

HOWEVER AS THE COURT WAS NOT ON THAT OCCASION QUESTIONED EITHER IN RESPECT OF ARTICLE 97 OR CONCERNING THE RELATIONSHIPS BETWEEN THAT ARTICLE AND ARTICLE 95 IT CONFINED ITSELF TO HOLDING THAT THE SPECIAL SITUATION OF ARTICLE 97 CANNOT IN ANY EVENT AFFECT THE INTERPRETATION OF ARTICLE 95 .

BY ITS JUDGMENT OF 3 APRIL 1968 IN CASE 28/67 ON A REFERENCE FROM THE BUNDESFINANZHOF, THE COURT RULED THAT ARTICLE 97 DOES NOT PRODUCE DIRECT EFFECTS AND DOES NOT CREATE INDIVIDUAL RIGHTS WHICH NATIONAL COURTS MUST PROTECT .

REFERENCE SHOULD THEREFORE BE MADE TO THAT JUDGMENT .

II - THE CONCEPT OF ' AVERAGE RATE ' AND THE TAXATION REFERRED TO IN ARTICLE 95 ( FIRST, SECOND AND SIXTH TO TENTH QUESTIONS )

( 1 ) IN ITS FIRST QUESTION THE COURT MAKING THE REFERENCE ASKS THE COURT OF JUSTICE TO STATE IN A GENERAL MANNER ' WHAT MUST BE UNDERSTOOD BY " AVERAGE RATE " WITHIN THE MEANING OF ARTICLE 97 OF THE EEC TREATY '.

P . 218

THE SECOND, SIXTH AND SEVENTH QUESTIONS RAISED BY THE SAID COURT CONCERN PROBLEMS RELATING TO THE APPLICATION OF ARTICLE 97 BY NATIONAL COURTS AND IN PARTICULAR THE CONCEPT OF ' AVERAGE RATE ' MENTIONED ABOVE .

FOR THE PURPOSE OF ANY LEGAL REVIEW OF THE COMPATIBILITY OF THE SAID AVERAGE RATES WITH THE PRINCIPLES OF THE FIRST PARAGRAPH OF ARTICLE 95 THE FINANZGERICHT OF THE SAARLAND ASKS IN ITS EIGHTH, NINTH AND TENTH QUESTIONS WHETHER THE TAXATION OF CERTAIN TRANSACTIONS WHICH IT ENUMERATES IS COVERED BY THE EXPRESSION ' INTERNAL TAXATION...IMPOSED ... INDIRECTLY ON SIMILAR DOMESTIC PRODUCTS ' APPEARING IN THE SAID FIRST PARAGRAPH .

( 2 ) AS TO THE FIRST AND SECOND QUESTIONS, BY VIRTUE OF THE FIRST PARAGRAPH OF ARTICLE 97 IT IS FOR THE MEMBER STATES TO ESTABLISH AVERAGE RATES, WITH THE COMMISSION ALONE HAVING POWER TO INTERVENE PURSUANT TO THE PROVISIONS OF THE SECOND PARAGRAPH OF ARTICLE 97, AND IN CERTAIN CIRCUMSTANCES OF ARTICLE 169, AGAINST THE FAILURE TO CONFORM TO THE PRINCIPLES SET OUT IN ARTICLE 95, WITHOUT PREJUDICE TO THE RIGHTS CONFERRED BY ARTICLE 170 ON THE OTHER MEMBER STATES .

IN THESE CIRCUMSTANCES, IT IS NOT FOR THE NATIONAL COURTS TO APPRAISE WHETHER AVERAGE RATES HAVE BEEN ESTABLISHED IN ACCORDANCE WITH THE PRINCIPLES OF ARTICLE 95, ALTHOUGH IT DOES NOT FOLLOW THAT THOSE COURTS MAY NOT IN ANY CASE BE REQUIRED TO DECIDE WHETHER THEY ARE FACED WITH AN AVERAGE RATE COMING UNDER ARTICLE 97 OR WITH A TAXATION COMING UNDER ARTICLE 95 .

ACCORDING TO THE WORDING OF ARTICLE 97 ITS APPLICATION IS SUBJECT TO A DOUBLE CONDITION : FIRST THAT THE MEMBER STATE LEVIES A TURNOVER TAX BASED ON THE CUMULATIVE MULTI-STAGE TAX SYSTEM AND SECONDLY, THAT IT HAS IN FACT EXERCISED THE POWER MADE AVAILABLE TO IT BY THE SAID PROVISION AND ESTABLISHED AVERAGE RATES .

CONSEQUENTLY ACCORDING TO COMMUNITY LEGISLATION CURRENTLY IN FORCE, IN STATES WHICH HAVE EXERCISED THE POWER MADE AVAILABLE TO THEM BY ARTICLE 97, RATES ARE CONSIDERED AS ' AVERAGE RATES ', IF THEY ARE ESTABLISHED AS SUCH BY THE STATES IN QUESTION EVEN IF THEY WERE INTRODUCED BEFORE THE ENTRY INTO FORCE OF THE TREATY AND WITHOUT PREJUDICE TO THE OPERATION OF THE SECOND PARAGRAPH OF THAT ARTICLE .

THE FIRST AND SECOND QUESTIONS OF THE FINANZGERICHT SHOULD THEREFORE BE ANSWERED TO THAT EFFECT .

( 3 ) IT FOLLOWS FROM THE INFORMATION PROVIDED BY THE COURT MAKING THE REFERENCE AND THE GENERAL STRUCTURE OF ITS QUESTIONS THAT THE EIGHTH, NINTH AND TENTH QUESTIONS REQUIRE AN INTERPRETATION OF ARTICLE 95 ONLY IN THE LIGHT OF THAT OF ARTICLE 97 .

CONSEQUENTLY THESE QUESTIONS ARE NO LONGER RELEVANT, SO THAT THE COURT NEED NOT REPLY TO THEM .

P . 219

( 4 ) THE SIXTH QUESTION INQUIRES WHETHER OR NOT IN CERTAIN CASES SET OUT BY THE FINANZGERICHT THERE IS A ' LEGAL AVERAGE RATE '.

BY THE SEVENTH QUESTION THE COURT IS ASKED TO SAY ' ON WHOM THE DUTY OF SETTING OUT THE CLAIMS AND THE BURDEN OF PROOF FALL WHEN THE PROCEEDINGS ARE CONCERNED WITH THE QUESTION WHETHER A RATE OF TAX CONSTITUTES AN AVERAGE RATE WITHIN THE MEANING OF ARTICLE 97 OF THE EEC TREATY '.

THESE TWO QUESTIONS WERE RAISED ONLY IN CASE THE COURT SHOULD RULE THAT ARTICLE 97 CREATES INDIVIDUAL RIGHTS .

AS THIS EVENTUALLY HAS NOT MATERIALIZED, THERE IS NO NECESSITY TO REPLY TO THESE QUESTIONS .

III - THE INTERPRETATION OF ARTICLE 11 OF REGULATION NO 22 OF THE COUNCIL ( ELEVENTH AND TWELFTH QUESTIONS )

THE ELEVENTH QUESTION OF THE FINANZGERICHT, PUT FORWARD IN CASE - AS HAS ACTUALLY HAPPENED - THE COURT SHOULD NOT RECOGNIZE ARTICLE 97 AS HAVING DIRECT EFFECT, INQUIRES WHETHER ' THE TURNOVER EQUALIZATION TAX IS IN WHOLE OR IN PART A CHARGE HAVING AN EFFECT EQUIVALENT TO THAT OF A CUSTOMS DUTY WITHIN THE MEANING OF ARTICLE 11 ' OF REGULATION NO 22 OF THE COUNCIL ON THE PROGRESSIVE ESTABLISHMENT OF A COMMON ORGANIZATION OF THE MARKETS IN POULTRY MEAT .

TO THE EXTENT TO WHICH THE COURT AGREES THAT SUCH IS THE CASE THE COURT MAKING THE REFERENCE ASKS IN ITS TWELFTH QUESTION WHETHER THE SAID ARTICLE 11 CREATES DIRECT INDIVIDUAL RIGHTS WHICH NATIONAL COURTS MUST PROTECT .

ALTHOUGH WITHIN THE FRAMEWORK OF ARTICLE 177 THE COURT DOES NOT HAVE THE JURISDICTION TO DECIDE UPON THE CLASSIFICATION OF THE DISPUTED TAX IN VIEW OF THE CONCEPTS OF COMMUNITY LAW, IT MAY ON THE OTHER HAND INTERPRET THE CONCEPT OF ' CHARGES HAVING EQUIVALENT EFFECT ' WITHIN THE MEANING OF THE SAID ARTICLE 11 IN RESPECT OF THE ESSENTIAL CHARACTERISTICS OF SUCH A CHARGE .

ACCORDING TO THE WORDING OF THE FIRST PARAGRAPH OF ARTICLE 11 OF REGULATION NO 22, IN TRADE BETWEEN MEMBER STATES, WHETHER IN RESPECT OF IMPORTS OR EXPORTS ' THE IMPOSITION OF ANY CUSTOMS DUTY OR CHARGE HAVING EQUIVALENT EFFECT ' IS INCOMPATIBLE WITH THE INTRA - COMMUNITY LEVY SYSTEM .

THE PRESENT CASE IS ONE DEALING WITH INTRA - COMMUNITY TRADE . CONSEQUENTLY THE QUESTION PUT BY THE COURT MAKING THE REFERENCE MUST BE CONSIDERED WITHIN THE FRAMEWORK OF THE PROVISIONS OF THE TREATY CONCERNING TRADE BETWEEN MEMBER STATES .

P . 220

THE CONCEPT OF ' CHARGE HAVING EQUIVALENT EFFECT ', WHICH DEPENDS UPON THAT OF A ' CUSTOMS DUTY ', HAS BEEN TAKEN FROM ARTICLES 9, 12 AND 13 OF THE TREATY .

NOTHING IN REGULATION NO 22 LEADS TO THE CONCLUSION THAT THIS REGULATION IS INTENDED TO GIVE THIS CONEPT A SCOPE DIFFERENT FROM THAT WHICH IT BEARS WITHIN THE FRAMEWORK OF THE TREATY ITSELF .

ARTICLES 12 AND 13 ON THE ONE HAND AND ARTICLE 95 ON THE OTHER CANNOT BE APPLIED TOGETHER TO A SINGLE SET OF FACTS .

CONSEQUENTLY IT IS DIFFICULT TO CONCLUDE THAT WITHIN THE SYSTEM OF THE TREATY ONE AND THE SAME CHARGE MAY AT THE SAME TIME BE A ' CHARGE HAVING EQUIVALENT EFFECT ' WITHIN THE MEANING OF ARTICLES 9, 12 AND 13 AND ALSO ' INTERNAL TAXATION ' FOR THE PURPOSES OF ARTICLES 95 AND 97 .

AN EQUALIZATION TAX SUCH AS THAT WHICH IS THE SUBJECT OF THE MAIN ACTION LEVIED WITHIN THE FRAMEWORK OF TURNOVER TAX LEGISLATION AND WHICH IS INTENDED TO PLACE ALL CATEGORIES OF PRODUCTS BOTH DOMESTIC AND IMPORTED IN A COMPARABLE TAX POSITION, AMOUNTS TO INTERNAL TAXATION WITHIN THE MEANING OF ARTICLE 95 .

IF IN THE CASE OF A GIVEN IMPORTED PRODUCT IT WERE TO EXCEED THE TOTAL AMOUNT OF THE DIRECT OR INDIRECT CHARGES ON THE EQUIVALENT DOMESTIC PRODUCT, IT WOULD THEN BE SUBJECT TO THE PROHIBITIONS CONTAINED IN ARTICLES 95 AND 97, BUT EVEN SO, WOULD NOT HAVE THE NATURE OF ' A CHARGE HAVING EQUIVALENT EFFECT '.

IT FOLLOWS FROM ALL THESE CONSIDERATIONS THAT THE REPLY TO THE ELEVENTH QUESTION OF THE FINANZGERICHT IS IN THE NEGATIVE .

IN THESE CIRCUMSTANCES THE TWELFTH QUESTION WHICH WAS RAISED ONLY IN CASE THE COURT MIGHT REPLY AFFIRMATIVELY TO THE PRECEDING QUESTION HAS BECOME IRRELEVANT .

Decision on costs

THE COSTS INCURRED BY THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY AND BY THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH SUBMITTED THEIR OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE AND AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, A STEP IN THE ACTION PENDING BEFORE THE FINANZGERICHT OF THE SAARLAND, THE DECISION ON COSTS IS A MATTER FOR THAT COURT .

Operative part

THE COURT

IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE FINANZGERICHT OF THE SAARLAND, BY ORDER OF THAT COURT OF 19 JUNE 1967, HEREBY RULES :

1 . THE FIRST PARAGRAPH OF ARTICLE 97, WHICH APPLIES WHERE MEMBER STATES OPERATING A TURNOVER TAX ACCORDING TO THE CUMULATIVE MULTI-STAGE SYSTEM HAVE ACTUALLY EXERCISED THE RIGHT THEREIN GRANTED TO THEM, DOES NOT CREATE INDIVIDUAL RIGHTS WHICH NATIONAL COURTS MUST PROTECT;

2 . IN STATES WHICH HAVE EXERCISED THE POWER MADE AVAILABLE TO THEM BY ARTICLE 97 RATES ARE CONSIDERED AS ' AVERAGE RATES ' IF THEY ARE ESTABLISHED AS SUCH BY THE STATES IN QUESTION, WITHOUT PREJUDICE TO THE OPERATION OF THE SECOND PARAGRAPH OF THAT ARTICLE;

3 . A TAX WHICH IS LEVIED WITHIN THE FRAMEWORK OF TURNOVER TAX LEGISLATION AND IS DESIGNED TO PLACE ALL CATEGORIES OF PRODUCTS BOTH DOMESTIC AND IMPORTED IN A COMPARABLE TAX SITUATION CONSTITUTES ' INTERNAL TAXATION ' WITHIN THE MEANING OF ARTICLE 95;

AND DECLARES :

IT IS FOR THE COURT MAKING THE REFERENCE TO DECIDE UPON THE COSTS OF THE PRESENT PROCEEDINGS .