98/617/EC: Commission Decision of 21 October 1998 denying authority to Italy to refuse the grant of exemption to certain products exempt from excise duty under Council Directive 92/83/EEC on the harmonisation of the structures of the excise duties on alcohol and alcoholic beverages (notified under document number C(1998) 3154) (Only the Italian text is authentic)
Date: 1998-10-21
Institutions: European Commission
Subjects: Italy, alcohol, alcoholic beverage, excise duty, tax exemption

4. 11. 98

EN

Official Journal of the European Communities

L 295/43

COMMISSION

COMMISSION DECISION

of 21 October 1998

denying authority to Italy to refuse the grant of exemption to certain products
exempt from excise duty under Council Directive 92/83/EEC on the harmonisa-
tion of the structures of the excise duties on alcohol and alcoholic beverages

(notified under document number C(1998) 3154)

(Only the Italian text is authentic)

(98/617/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Directive 92/83/EEC of 19
October 1992 on the harmonisation of the structures of
the excise duties on alcohol and alcoholic beverages (1),
and in particular Article 27(5) thereof,

Having regard to the notification sent by Italy to the
Commission and transmitted by the Commission to the
other Member States,

Whereas:

(1) By letter of 4 July 1997, Italy notified the Commis-
sion that it had imposed the following national
for exemption on certain products,
conditions
whether
from other Member States,
falling within Article 27(1)(b) of Directive 92/
83/EEC:

Italian or

— perfumes and cosmetics: that they contain no

waste alcohol,

— certain household products (liquid detergents
and washing preparations (for laundry, dishes
and hard surfaces) of CN code 3402, self-shine
liquid shoe polish of CN code 3405, room
deodorisers in liquid form, aerosol and spray of
CN code 3307,
insecticides in liquid form
aerosol and spray of CN code 3808): that their
alcoholic strength should not exceed 40 % vol.

(2) The notification explained that the conditions it
imposed on the grant of exemption were designed
to ensure that goods ‘deliberately prepared in an
irregular manner cannot benefit unlawfully from
the denaturing arrangements or the movement and
warehousing procedures laid down for certain cat-
egories of goods'. The example of a lightly dena-
tured cosmetic marketed as perfume was given.
This had been exempted under Article 27(1)(b) but
did not have the requisite properties to be consid-
ered a perfume and was in fact used for the purpose
of completely denatured alcohol, exempt under
Article 27(1)(a).

(3) The notification requested the Commission to
advise the other Member States in accordance with
Article 27(5) of Directive 92/83/EEC, so that a
decision on Italy’s action might be taken in accord-
ance with the procedure laid down in Article 24 of
Council Directive 92/12/EEC of 25 February 1992
on the holding, movement and monitoring of such
products subject to excise duty (2), as last amended
by Directive 96/99/EC (3).

(4)

In the view of the Commission, the notification
contained insufficient
information to permit a
decision to be drafted authorising Italy’s action.
The Italian authorities were therefore invited to
explain in more detail the reasons for their request
in the presence of the Excise Committee.

(1) OJ L 316, 31. 10. 1992, p. 21.

(2) OJ L 76, 25. 2. 1992, p. 1.
(3) OJ L 8, 11. 1. 1997, p. 12.

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4. 11. 98

(5) At a meeting of that Committee which took place
on 8 October 1997, the Italian delegation explained
the position broadly as set out in its original noti-
fication. After considerable discussion the Commis-
sion’s representative concluded that he still lacked
sufficient information to draft a proposal and the
Committee was in no position to take a decision.
The Italian delegation was requested to produce
further information regarding the excise duty risk
in particular as to whether the goods
involved,
concerned were used for taxable purposes.

(6) By letter of 10 November 1997, the Italian author-

ities further explained:

not they wished the procedure laid down in Article
27(5) to be terminated.

(8) By letter of 20 February 1998, the Italian author-
ities further explained that in the case which had
actually occurred, referred to in its previous letter,
perfume delivered from another Member State was
found to have been produced with denatured
alcohol which complied with the Italian denaturing
rules, but not with the requirement that it be pure.
Italy requested confirmation that in such a case a
Member State might refuse exemption without the
need to activate the Article 27(5) procedure.

— that their action was based on the increased
risks to the revenue of products which do not
meet nationally imposed conditions,

(9)

— that the Directive provides a control system for
the products of Article 27(1)(a) which is much
stricter than for the products of Article 27(1)(b),

In the case of an affirmative reply, Italy pointed out
that the Article 27(5) procedure remained necessary
for products denatured according to the rules of the
Member State of origin but which did not satisfy
the Italian condition regarding waste alcohol. No
such case had however been discovered to date.

— that in a case which had occurred, a lightly
denatured product containing waste alcohol,
and declared as a cosmetic (for which waste
alcohol
is not normally used) exempt under
Article 27(1)(b), was marketed and subsequently
used for cleaning purposes; hence, the product
a
concerned was
completely denatured alcohol under Article
27(1)(a), and thus benefiting unlawfully from a
more favourable system,

substituted

being

for

— that such a result entails both a revenue risk

and distortion of competition,

— that

the condition that household products
which are exempt under Article 27(1)(b) should
have an alcoholic strength not exceeding 40 %
vol. was imposed for similar reasons, such prod-
ucts not normally exceeding that strength, and
no complaints having arisen.

(10) The purpose of Directive 92/83/EEC is to create, in
the field of alcohol taxation, conditions ensuring
the establishment and functioning of the internal
market. Article 27(1) of the Directive specifies the
alcoholic products which shall be exempt from
duty throughout the Community. With the excep-
tion of
‘completely denatured' alcohol exempt
under Article 27(1)(a), for which special provisions
the system laid down is that of mutual
apply,
acceptance — once a product falling under Article
27(1)(b) has been exempted in any Member State it
may move freely throughout the Community. The
that Directive is to
purpose of Article 27(5) of
permit Member States to take prompt action to
safeguard their revenue should the operation of the
general rules lead to genuine cases of evasion,
avoidance or abuse.

(7) After a further meeting of the Excise Committee
held on 1 December 1997 at which the Italian
delegation received no support for its position, the
Commission’s representative concluded that if a
decision was to be drafted, the Italian authorities
still needed to supply sufficient information on the
products and to take a decision as to whether or

(11) As regards the reasons given by Italy for the refusal
of exemption to cosmetics (perfumes) containing
impure alcohol, the use of cheap impure alcohol to
produce goods falling within Article 27(1)(b) cannot
be regarded as a cause of evasion, avoidance or
abuse in particular since, on the one hand, an
impure alcohol presents less danger of improper
use and, on the other hand, whether or not

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L 295/45

are
cosmetics produced from impure alcohol
cheaper, Article 27(1)(b) is in no way restricted to
expensive goods, the disparate goods falling within
it varying extremely widely in price. Nor does
anything in the Directive require products exempt
under Article 27(1)(b)
(which are not for human
consumption) to be derived from pure alcohol.

(12) Moreover, since Article 27(1)(b) covers not only, or
even mainly, cosmetics, but also products used
inter alia for cleaning purposes, the use of goods
described as cosmetics
for cleaning purposes
cannot affect
their classification under Article
27(1)(b) and cannot be regarded as evasion, avoid-
ance or abuse. This seems particularly clear in view
of the fact that in some Member States it is not
unusual for colognes and the like to be used for
non-cosmetic purposes such as cleaning. The fact
that the ‘completely denatured' alcohols of Article
27(1)(a) may also be used for such purposes is not
relevant.

(13) The above considerations apply equally to the
particular case raised by Italy of goods which
arrived at their destination declared to be denatured
in accordance with Italian rules but not meeting
the requirement that they be pure. In addition:
(i) movements under Article 27(1)(b) should be
formalities, and require no

entirely free of
declarations;

(ii) compliance with the requirements of any

Member State is sufficient, and

(iii) since the methods of denaturing for the prod-
ucts of Article 27(1)(b) are not laid down at
Community level, the fact that the goods have
been released — for free movement through-
out the Community — in the Member State of
origin is evidence that they have fulfilled that
Member State’s requirements.

(14) The above considerations apply equally to the case
of perfumes exempt under 27(1)(b) and denatured
according to the rules of other Member States but
not meeting Italy’s condition that they be derived

(15)

(16)

from pure alcohol. In addition, however, Italy has
stated that no such cases have been found.

Similar considerations apply to Italy’s refusal of
exemption to certain household products, where
Italy has simply pointed out that its reasons for
refusing exemption are similar to those concerning
cosmetics, that no complaints have been received
and that the normal trade is not affected by its
condition for exemption.

In addition, Italy has not shown that any of the
products subject to its refusal of exemption have in
fact given rise to any actual evasion, avoidance or
abuse. Nor has any other Member State — most of
which have much higher duty rates than Italy —
reported any problems of evasion avoidance or
abuse arising from the exemption of these prod-
ucts.

(17) The measures provided for in this Decision are in
accordance with the opinion of the Committee on
Excise Duties,

HAS ADOPTED THIS DECISION:

Article 1

Italy is not authorised to refuse the grant of exemption
from excise duty on the products notified in its letter of 4
July 1997.

Article 2

This Decision is addressed to the Italian Republic.

Done at Brussels, 21 October 1998.

For the Commission

Mario MONTI

Member of the Commission