Proposal for a Council Directive amending Directive 92/12/EEC on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products
Date: 1997-06-27
Institutions: European Commission
Subjects: application of EU law, approximation of laws, committee (EU), excise duty, free movement of goods

«PMWKP 

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  27.06.1997 
COM(97) 326  final 

97/0181  (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 92/12/EEC 

on the general arrangements for products subject to 

excise duty and on the holding, movement and 

monitoring of such products 

(presented by the Commission) 

- 1-

EXPLANATORY  MEMORANDUM 

The  Committee  on Excise Duties  ("Excise  Committee")  and  its current  terms 

1. 
of  reference 

Article 24 of  Directive 92/12/EEC,  as amended by Article  1(11)  of Directive 94/74/EEC, 
stipulates that  the  Commission  is to  be  assisted  by a Committee  on  Excise  Duties  with  a 
view  to  ensuring  that  the  Community  provisions  on  excise  duties  are  correctly  and 
uniformly  interpreted  and applied. 

The above-mentioned  provision  assigns a dual role to the Committee: 

It may act: 

-  either  under  the "regulatory  committee"  procedure  as  regards  the  measures  necessary 
for  applying  Articles 5,1  7,2  15b,3  18,4 and  235  of Directive 92/12/EEC,  Article 276  of 
Directive 92/83/EEC and Directive 95/60/EC;7 

-  or  as  an  advisory  committee  as  regards  the  application  of  the  other  Community 

provisions on excise duties. 

1.1 

Regulatory  role 

In  the  course  of  performing  its  regulatory  function,  the  Committee  has  delivered  its 
opinion on the following  regulations: 

(a) 

(b) 

(c) 

(d) 

Regulation  (EEC)  No 2719/92  of  11 September  1992  on  the  accompanying 
administrative document  for the movement  under duty-suspension  arrangements  of 
products  subject  to excise duty, as amended  by Regulation  (EEC) No 2225/93; 

(EEC)  No 3649/92  of  17 December  1992  on 

Regulation 
simplified 
accompanying  document  for  products  which  have  been  released  for  consumption 
in the Member  State of dispatch; 

a 

Regulation  (EC)  No 31/96  of  10 January  1996  on  the  excise  duty  exemption 
certification; 

Regulation  (EC) No 3199/93  of  22 November  1993  on  the  mutual  recognition  of 
procedures  for  the  complete  denaturing  of  alcohol,  as  amended  by  Regulation 
(EC) No 2546/95. 

1  Adaptation of customs documents for products subject to excise duty. 

2  Accompanying document for products already released for consumption. 

3  Document for the exchange of information between national administrations. 

4  Accompanying document for products moving under duty-suspension arrangements. 

5  Exemption certificate for certain international bodies. 

6  Mutual recognition of alcohol dénaturants. 

7  Marking of certain mineral oils that are exempt or taxed at a reduced rate. 

I 

- 2-

Following  the  adoption  of  Council  Directive 95/60/EEC  of  27 November  1995,  the 
Committee will  also be called upon to give its opinion on the specification  of products to 
be  used  ifor  the  fiscal  marking  of  gas  oil  and  kerosene  that  are  to  be  released  for 
consumption exempt from, or at a reduced rate of,  duty. 

1.2 

A dvisory role 

When it comes to  ensuring that the remaining Community provisions  on excise  duties are 
correctly and uniformly interpreted and applied, the Committee has only an advisory role. 

On several occasions it has been called upon to resolve urgent problems that could not be 
resolved under existing Community legislation. 

For example: 

Movement: 

-  Movement  of  mineral  oils by  ship (consignee  unknown).  While being  transported  by 
ship, goods  may undergo  several  changes of owner  and/or consignee.  Transportation 
to  destinations  outside  the EU  triggers  a change  of  legal  regime;  consignments  then 
cease  to  be  covered  by  the  tax  rules  governing  intra-Community  movement,  falling 
instead under the customs rules governing exportation; 

-.  Movement  of mineral oils by pipeline; 

-  Formalities  to  be  observed  in  the  event  that  goods  refused  by  the  consignee  are 

returned to the consignor; 

-  Link-up needed with the customs rules governing exportation or transit; 

-  Transport by rail and use of the CIM consignment note. 

Taxation: 

-  Tax treatment  of flavourings used in the manufacture of drinks; 

-  Tax treatment of firelighters; 

-  Tax  treatment  of  certain  tobacco  products,  and  problems  of  double  taxation  of 

cigarettes bearing tax markings; 

-  Tax  treatment  of  new  products  (particularly  alcoholic  beverages  and  manufactured 

tobacco) whose features make their classification  for excise purposes uncertain. 

2.  General  features  of the common  excise-duty  system 

- 3-

An examination of problems such as those mentioned above brings out the complexity and 
ongoing development of the Community excise-duty system. 

It should be borne in mind that the finishing  line for Community  harmonization  of  excise 
duties was crossed only a few months before the entry into force of the single market. 

Thus,  unlike  other  areas  of  taxation  (customs,  VAT)  which  underwent  a  slower  and 
gradual harmonization  process,  the Community system of excise  duties took  shape at the 
same time as the single market and, what is more, in the form of definitive arrangements. 

Within the general structure of the system there is a degree of flexibility which has made it 
possible to  adapt  to  legal,  economic  and  social  factors  that  differ  significantly  from  one 
Member State to another.  But this is also a weakness of the system. 

This is because the system comprises: 

-  a  horizontal  Directive  (Directive 92/12/EEC  and  subsequent  amendments)  on  the 
general  arrangements  for  products  subject  to  excise  duty  and on the  holding,  movement 
and monitoring of such products; 

-  specific directives on the tax classification  of products (the "structural" Directives8) that 
concern  the  definition  of  products  subject  to  excise  duty  and  their  division  into  tax 
categories for  each  of the following:  mineral  oils,  alcoholic  beverages  and  manufactured 
tobacco; 

-  specific  directives  laying  down the minimum rates of excise  duty for  each tax  category 
of product (the "rates" Directives9). 

While  the  Directives  on  minimum  rates  of  excise  duty  form  a  clearly  defined  and rigid 
system,  the  horizontal  Directive  constitutes  a general  framework  of  principles  and  rules 
for  ensuring  the  free  movement  of  goods  in  a  manner  compatible  with  the  monitoring 
requirements. 

For this  reason,  the  procedures  laid  down  in that Directive  are described  in only  general 
terms  and  there  is  a resulting  risk  of  divergent  interpretations  and  implementation  or  of 
Member States  adopting  mutually  incompatible  national  provisions.  Experience  over the 
last few years has clearly demonstrated this. 

Directive 92/81/EEC on  the structures  of excise duties on  mineral  oils, Directive 92/83/EEC on the 
structures of excise duties on alcohol and alcoholic beverages, and Directive 95/59/EC on taxes other 
than turnover taxes which affect  the consumption of manufactured tobacco. 

Directive 92/82/EEC  for  mineral  oils,  Directive 92/84/EEC  for  alcoholic  beverages,  and 
Directives 92/79/EEC and 92/80/EEC for cigarettes and other manufactured  tobacco. 

- 4-

In addition, a number of general  rules contained  in the Directive are not  applicable if they 
are transposed  as  such at national  level.  They  require legal  structures  directly  applicable 
throughout  Community  territory.  This  applies,  for  example,  to  the  measures  to  be 
adopted  with  a view  to  recovering  the  guarantee  lodged  by  the  person  responsible  for 
transportation in the event of the discovery of an irregularity or infringement. 

Thus,  a  considerable  number  of  problems  submitted  to  date  to  the  Committee  have 
remained  unresolved  since the Commission  is not  empowered  to take  a decision  with the 
assistance of the Committee. 

Other problems, e.g. the rules governing the movement of mineral oils not subject to duty, 
have  required  the  adoption  of  â new  directive.  This  solution  is  not  always  appropriate 
given that adopting and transposing a directive is a very protracted process. 

3.  Legal  problems  associated  with the Committee's  advisory  role 

The  Commission  is  empowered  to  lay  down  rules  on  excise  duties  only  in  the  specific 
cases referred  to  in Article 24(2)  of Directive 92/12/EEC.  Other cases may  be examined 
only in an advisory capacity by the Committee provided for in Article 24(5). 

In other words,  the Committee examines the problems raised by the Member States or by 
the Commission  representative and gives its opinion.  The resolutions thus adopted  do not 
have binding legal force in the Member States and are not public. 

It  follows  from  this  that  the  Member States  are  not  legally  bound  to  abide  by  the 
Committee's  opinions,  even  where  these  have  been  adopted  unanimously,  and  that  the 
adoption of national provisions in line with the Committee's opinion is entirely voluntary. 

Consequently,  in the event of non-transposal or of incomplete or divergent  transposai, the 
Commission  is  unable  to  institute  infringement  proceedings  against  the  Member State 
concerned.  Because  they  have  no  legal  force,  the guidelines  adopted  by the  Committee 
cannot be invoked before the courts by the parties concerned. 

Moreover,  even  where  Member States  comply  with  the  guidelines  adopted  by  the 
Committee,  they  may  encounter  legal  rulings  by  the  courts  that  run  counter  to  the 
common interpretation. 

Once the opinions  delivered  and guidelines  issued  by the Committee  do  not  form  part  of 
Community law, the new Member States are not obliged  to accept them, particularly since 
those  opinions  were  adopted  on  an agreed  basis,  following  discussions  in which  they did 
not take part. 

This  last  aspect  could  become  even  more  worrying  when  the  countries  of  central  and 
eastern Europe join the Union. 

4. 

Outlook 

The  Member  States  have  recently  encountered  another  challenge:  combating  fraud  and 
contraband.  Products  subject  to  excise  duty  have  always  been  the  object  of  illegal 
activity,  and  it  is  understandable  that  specialist  criminal  organizations  try  to  profit  from 
the fact  that  national monitoring procedures have not been fully  harmonized. 

In  addition,  administrative  monitoring  procedures  must  keep  pace  with  the  rapid 
technological  advances in systems for gathering and exchanging data.  The  current  system 
for  monitoring  the intra-Community  movement  of goods  subject  to  excise  duty,  which  is 
based  on  accompanying  documents,  is to  be  discontinued  and  replaced  (or,  for  an  initial 
period, backed  up) by computerized  monitoring systems. 

Since  the  same  scenario  awaits  Community  transit,  it  is  desirable  that  the  two  systems 
work in parallel in order to ensu  e uniformity  of treatment for businesses. 

Against  this  background,  the  introduction  of  more  flexible  and  more  streamlined 
arrangements  for  Community excise-duty procedures must be accorded  priority. 

It goes without  saying that the Member States must, in any event,  retain their autonomy in 
tax matters.  Accordingly, the scope of the proposal  for  a Directive does  not  extend  to  the 
Community  provisions governing levels of duty. 

The  regulatory  powers  provided  for  by  the  proposal  for  a  Directive  relate  only  to  the 
correct  and  uniform  application  of the horizontal  and structural  Directives. 

Problems  are  posed  by  the  tax  treatment  of  a  number  of  products  whose  features  make 
their  tax  categorization  uncertain.  In  such  cases,  a general  implementing  rule  is  required 
so  that  the  same  product  will  not  be taxed  differently  according  to  the Member  States  in 
which  it  is released  for  consumption,  the aim being to  avoid  all  forms  of  abusive  practice 
and distortion  of competition. 

- 4 ,-

JExnlanation of the articles 

Article  1 - Change  in  the  powers  assigned  to the Commission  and  the  Committee  in 
the excise duty  field 

Article  1  of  the  proposal  for  a  Directive  amends  Article 24  of  Directive 92/12/EEC  in 
such a way as to  assign to the Commission  wider-ranging  regulatory  powers with regard 
to excise duties. 

Accordingly,  the first  paragraph stipulates that the Commission  may adopt  the  measures 
necessary  for  the  correct  and  uniform  application  both  of  the  provisions  of 
Directive 92/12/EEC and of the provisions contained in the structural Directives. 

The following  paragraphs concern the powers of the Committee, which will be able to act 
as  a  regulatory  committee  in  the  matters  referred  to  in  the  preceding  paragraph.  The 
Committee  will  deliver  its  opinion  on  draft  measures  submitted  by  the  Commission 
representative and will act by a qualified majority. 

The  setting-up  of  the  Committee  and  the  procedure  to  be  followed  are  proposed  in 
accordance with procedure 111(a) referred to in Article 2 of Council Decision 87/373/EEC 
of  13 July  1997  laying  down  the  procedures  for  the  exercise  of  implementing  powers 
conferred  on the Commission.10 

The Committee  will  therefore  be called  upon to  give  its  opinion  on trje measures  needed 
to ensure the proper functioning  of the Community excise-duty  system with regard to the 
movement  and taxation  of products.  This role is assigned  to  it with  a view  to  combating 
abusive practices and tax fraud and in anticipation of the introduction of more modern and 
efficient  monitoring systems. 

The Committee  will  retain  its consultative  powers  in matters  not  covered  by the  powers 
exercised  under  the  "regulatory  committee"  procedure  (e.g.  administrative  cooperation 
and exchange of information between Member States). 

10  O J N oL  197,  18.7.1987, p. 33. 

-V 

Proposal  for a 

COUNCIL  DIRECTIVE 

amending Directive 92/12/EEC 
on the general arrangements for products subject  to 
excise duty and on the holding, movement and 
monitoring of such products 

THE COUNCIL  OF THE EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 99 thereof, 

Having regard to the proposal from  the Commission, 

Having regard to the opinion of the European  Parliament, 

Having regard to the opinion of the Economic and Social Committee, 

Whereas  Article 24  of  Directive 92/12/EEC  on  the  general  arrangements  for  products 
subject  to  excise  duty  and  on  the  holding,  movement  and  monitoring  of  such  products 
confers  on the  Commission  regulatory  powers within the limits laid down  in Articles 5, 7, 
15b,  18,  19 and 23 of that Directive; 

Whereas  the  Commission  has  already  adopted  regulations  implementing  the  above 
provisions; 

Whereas  experience  gained  with  regard  to  the  harmonization  of  national  excise-duty 
legislation,  and  in  particular  the  provisions  concerning  the  system  of  intra-Community 
movement  and  the  structure  of  excise  duties,  has  shown  that  the  relevant  Community 
legislation needs to be more uniformly  interpreted  and applied; 

Whereas, for  the reasons  stated  above, the terms of reference  of the Committee  on Excise 
Duties should  be changed; 

Whereas the 
of implementing  powers conferred  on the Commission, 

Decision  of  13 July  1987  has laid  down the procedures  for  the  exercise 

HAS  ADOPTED  THIS  DIRECTIVE: 

-%-

Article 1 

Directive 92/12/EEC is hereby amended as follows: 
Article 24 of the Directive is replaced by: 

"Article 24 

The measures necessary for  the correct and uniform  application of this Directive 

1. 
and of the following Directives: 

-  Council  Directive 92/81/EEC  of  19 October 1992  on  the  harmonization  of  the 

structures of excise duties on mineral oils;1 

-  Council  Directive 92/83/EEC  of  19 October 1992  on  the  harmonization  of  the 

structures of excise duties on alcohol and alcoholic beverages;2 

-  Council Directive 95/59/EC of 27 November 1995 on taxes other than turnover taxes 

which affect the consumption of manufactured tobacco;3 

shall be adopted by the Commission in accordance with the procedure set out below. 

2.  -  The Commission  shall be assisted  by a Committee  on Excise Duties,  hereinafter 
referred  to as the "Committee".  The Committee shall be composed of representatives of 
the Member States and chaired by a Commission representative. 

3. 
The  Commission  representative  shall  submit  to  the  Committee  a  draft  of  the 
measures to be adopted.  The Committee  shall deliver its opinion  on the  draft  within a 
time limit which the Chairman may lay down according to the urgency of the matter.  It 
shall take its decision by the majority  laid down in Article 148(2) of the  Treaty  for  the 
adoption of decisions which the Council is called upon to take acting on a proposal  from 
the Commission.  The Chairman shall not vote. 

4.  (a) 

(b) 

The  Commission  shall  adopt  the  intended  measures  where  they  are  in 
accordance with the Committee's opinion. 

Where the intended measures are not in accordance with the opinion of the 
Committee,  or  in  the  absence  of  any  opinion,  the  Commission  shall 
forthwith  submit to the Council a proposal relating to the measures to be 
taken.  The Council shall act by a qualified  majority. 

1  OJNoL316,  31.12.1992, p. 12. 

2  OJNoL316,  31.12.1992, p. 21. 

3  OJNoL  291, 6.12.1995, p. 40. 

, 9-

(c) 

If,  on the expiry of a period of  three months from the date on which the 
matter was referred  to it, the Council has not  adopted  any measures, the 
Commission shall adopt the proposed measures. 

In  addition  to  the  measures  referred  to  in  paragraph 1,  the  Committee  shall 
5. 
examine the matters raised by its Chairman, either on his own initiative or at the request of 
the  representative  of  a  Member State,  concerning  the  application  of  the  Community 
provisions on excise duties." 

Article 2 

Member States  shall  bring  into  force  the  laws,  regulations  and  administrative 

1. 
provisions necessary to comply with this Directive on ... 
When  Member States  adopt  these  measures,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication.  The  methods  of  making  such  a  reference  shall  be  laid  down  by  the 
Member State. 

Member States shall inform the Commission of the main provisions of national law 

2. 
which they adopt to comply with this Directive. 

Article 3 

This Directive shall enter into force on the day that it is published in the Official Journal of 
the European Communities. 

This Directive is addressed to the Member States. 

Article 4 

Done at Brussels, 

For the Council 
The President 

-  vo-

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