CELEX: 61979CC0140
Language: en
Date: 1980-04-29
Title: Opinion of Mr Advocate General Mayras delivered on 29 April 1980. # Chemial Farmaceutici SpA v DAF SpA. # Reference for a preliminary ruling: Pretura di Castell'Arquato - Italy. # Taxation of denatured alcohol. # Case 140/79.

OPINION OF MR ADVOCATE GENERAL MAYRAS
      DELIVERED ON 29 APRIL 1980 (
            1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      The Pretura di Castell'Arquato, by an order of 6 September 1979, has referred to your Lordships, pursuant to Article 177 of the Treaty of Rome, questions for a preliminary ruling on the interpretation or Article 95 of that Treaty with reference to the Italian legislation on the taxation of denatured alcohol, because he considers that “the examination of the legality of the increase in the State tax at issue, laid down by Law No 506 of 18 August 1978, becomes decisive as a preliminary question to be resolved for the purposes of the decision”.
      These questions are very similar to those referred to your Lordships by an order made in chambers on 30 January 1980 by the Honorary Vice-Pretore of Casteggio which are the subject-matter of Case 46/80.
      
               I — 
            
            
               In this case Chemial Farmaceutici SpA of Turin [hereinafter referred to as “Chemial”] has asked the Pretura to order DAF SpA of San Giorgio Piacentino [hereinafter referred to as “DAF”] to give effect to an offer for sale made on 18 July 1978 and accepted by the parties inter se on 27 July 1978 relating to “a sample of 20 hectolitres of synthetic ethyl alcohol, having an alcoholic strength of 90o, imported from a Member State and denatured”, to be supplied on 15 September 1978.
               DAF has put forward as justification of its refusal to sell the fact that Chemial refused to pay it a supplement to the price representing the increase of the special State tax on denatured ethyl alcohol arising out of Article 3 of the Law of 18 August 1978 which raised this tax from LIT 6000 to LIT 12000 per hectolitre. Chemial for its part has pleaded that, having regard to Article 95 of the Treaty, the special State tax and especially the increase following the law of August 1978 is illegal.
            
         
               II — 
            
            
               It is in fact apparent that Chemial, by means of these proceedings, is seeking, on the basis of an “important” judgment of the Court of Justice (judgment of 10 October 1978 in Case 148/77 H. Hansen jun. & O. G Balle GmbH & Co. v Hauptzollamt Flensburg [1978] ECR 1787
                  et seq.) to persuade your Lordships to rule that the Italian Republic, by continuing to apply the special tax of LIT 6000 per hectolitre of denatured synthetic alcohol, introduced by Decreto Legge No 1200 of 6 October 1948, as amended by Decreto Legge No 836 of 16 September 1955 — which was later increased to LIT 12000 by Law No 506 of 18 August 1978 — has failed to fulfil its obligations under Article 95 of the Treaty.
               I find proof of the artificial nature of this “device” in the following facts :
               
                        1.
                     
                     
                        It is clear from the file on the case that DAF, in order to perform its obligations, offered the same quantity of ethyl alcohol, which it had produced itself, of agricultural origin, “of particularly good quality”, but that Chemial rejected this offer “for technical reasons” by absolutely insisting on synthetic alcohol (synthetic ethanol) being supplied.
                        However, according to the findings of the Pretura, denatured ethyl alcohol is absolutely identical whether it is of synthetic origin or derived from the fermentation of an agricultural substance, and it is classified in each case under the same subheading of the Common Customs Tariff (22.08 A).
                        We are concerned with “an identical product which is completely fungible on the market” and the Commission also points out that “ethyl alcohols which have the same degree of purity following completion of either the distillation or synthetic production process are completely interchangeable ...”.
                        Thus Chemial by requiring synthetic alcohol — rather than alcohol of agricultural origin — although these products are interchangeable for the purposes of the use to which it intended to put them — acted against its own commercial interests, since, instead of the tax being LIT 6000 in the case of denatured synthetic alcohol it would only have been LIT 1000 for denatured alcohol derived from fermentation, produced and offered by DAF.
                     
                  
                        2.
                     
                     
                        The taxation of ethyl alcohol which is alleged to be discriminatory originated in the Decreto Legge or 1948, as amended by Decreto Legge No 836 of 16 September 1955. For this reason alone Chemial should have informed DAF of its reservations even before the increase of 18 August 1978.
                     
                  
         
               Ill — 
            
            
               Moreover your Lordships have not been taken in by this “device”; although none of the Member States — not even the Italian Republic — nor the Commission have requested that the case be decided in plenary session, your Lordships have not made an order assigning it to a chamber.
               The Commission states in support of its observations that on 18 June 1976 it invited the Italian Republic to submit its observations and subsequently on 31 July 1978 the Commission gave the Italian Republic notice of a reasoned opinion pursuant to Article 169 and invited it to adopt, within a period of one month, the requisite measures to eliminate the differential taxation as far as concerns the application of the production tax and the State tax on alcohols. Since the reasoned opinion has not been complied with the Commission indicated in its observations of 12 November 1979 that it intended to bring the matter before the Court of Justice “in the near future”.
               
               Up to now and in spite of the fact that in the Commission's view the increase introduced by Article 3 of the Law of 1978 makes the fiscal discrimination worse, more than six months have passed without the Commission carrying out its “intention”.
               I can moreover well understand its attitude because, if the Commission succeeded in having the question decided by a national court at least in a similar case, there would be no need for it to bring the matter before the Court under Article 169.
               But, apart from the delicate situation in which the Advocate General of this Court might find himself if the Commission decided to bring the matter before your Lordships pursuant to that article after delivery of his opinion and prior to your Lordships' ruling, this course of conduct is not in keeping with the task with which the authors of the Treaty intended to entrust the Commission by enjoining it to “ensure that the provisions of this Treaty and the measures taken by the institutions pursuant thereto are applied” (Article 155).
               Although the procedure under Article 177 is certainly an autonomous legal process which enables individuals to obtain direct protection of their rights under the provisions of the Treaty that legal procedure and the action for failure to fulful an obligation are intermixed to an unacceptable degree where the procedure under Article 169 is initiated before the occurrence of the facts which give rise to the reference for a preliminary ruling.
               It is appropriate to draw attention at this point to the observations concerning the procedure for a preliminary ruling made by Mr Advocate General Gand in his opinion in Case 20/64, Sàrl Albatros v Société de Pétroles et des Combustibles Liquides (SOPECO) [1965] ECR 29 at p. 39, which he delivered on 2 December 1964. Concurring with Mr Advocate General Lagrange he drew attention to “on the one hand, the difficulty of tracing the boundary between interpretation and application of the Treaty, which is simultaneously the boundary of the respective jurisdictions of the Community Court and the national courts, the settlement of disputes over which has not been allotted to any court”. “On the other hand” he asks “is it necessary to take to its final conclusion the principle whereby the Court does not have the task of assessing the considerations upon which the national court based its reference for a preliminary ruling, even if the question put is clearly without any relation to the dispute in the main action? Must the Court nevertheless give in such a case an abstract, theoretical interpretation unconnected with the settlement of a dispute, but which it would nonetheless be possible to raise for other purposes and which might create conflicts with national courts or authorities? Perhaps you will one day have to fix a limit to what might appear an abuse of procedure”.
               By a very recent decision (judgment of 11 March 1980 in Case 104/79, Pasquale Foglia v Mariella Novello [1980] ECR 745, after Mr Advocate General Warner had delivered an opinion to the same effect) your Lordships have just set an initial limit to such abuses.
               Although it is perfectly true, as the order from the Pretura states, that “it is for the Court of Justice to determine whether the system in question is compatible with Community provisions”, the procedure under Article 177 is inadequate and unsuitable for the purpose of asking “the Court of Justice to rule whether the special State tax levied in Italy on alcohol to be denatured ... is unlawful” to use the words of this order.
               Only the plaintiff in the main action and the Commission have submitted observations. The defendant company has not defined its position. On 13 March 1980 the Italian Government submitted extremely detailed oral observations which could not be recorded in the report for the hearing but, since the proceedings under Article 177 are not adversary proceedings, that procedure does not permit your Lordships either to appraise correctly all the implications of the question or to obtain elucidation if necessary by measures of inquiry which might prove essential in such a technical field.
               Your Lordships held in your judgment of 11 March 1980 in the above-mentioned Foglia case that “The duty of the Court of Justice under Article 177 of the EEC Treaty is to supply all courts in the Community with the information on the interpretation of Community law which is necessary to enable them to settle genuine disputes which are brought before them. A situation in which the Court was obliged by the expedient of arrangements like those described above to give rulings would jeopardize the whole system of legal remedies available to private individuals to enable them to protect themselves against tax provisions which are contrary to the Treaty” (paragraph 11 of the decision). It continued: “This means that the questions asked by the national court, having regard to the circumstances of this case, do not fall within the framework of the duties of the Court of Justice under Article 177 of the Treaty” (paragraph 12 of the decision).
            
         I submit that your Lordships should hold that the Court of Justice does not have jurisdiction to rule on the questions referred to it by the national court. If your Lordships do not accept this solution I shall request you to permit me to give my opinion on the substance of the case.
      (
            1
         )	Translated from the French.