CELEX: 62004CC0197
Language: en
Date: 2005-07-14 00:00:00
Title: Opinion of Mr Advocate General Jacobs delivered on 14 July 2005. # Commission of the European Communities v Federal Republic of Germany. # Failure of a Member State to fulfil obligations - Tax on the consumption of manufactured tobacco - Separate taxation of cigarettes and rolls of tobacco "West Single Packs". # Case C-197/04.

OPINION OF ADVOCATE GENERAL
      Jacobs
      delivered on 14 July 2005 (1)
      
      Case C-197/04
      Commission of the European Communities
      v
      Federal Republic of Germany
      1.     In this case, the Commission seeks a declaration that, by applying the tax rate for fine-cut tobacco for self-rolled cigarettes
         to rolls of tobacco sold under the name ‘West Single Packs’, the Federal Republic of Germany has failed to fulfil its obligations
         under Article 4(1)(b) of Council Directive 95/59/EC (2) and Article 2(1) of Council Directive 92/79/EEC. (3)
      
      2.     The issue between the parties is whether for excise duty purposes such rolls should be deemed to be cigarettes or fine-cut
         tobacco for the rolling of cigarettes.
      
      
       Relevant legislation
      3.     In the Community, rates of excise duty on tobacco products are to a certain extent harmonised.  An exposition of the detailed
         rules applicable to that harmonisation is unnecessary here.  It need merely be noted that the overall duty, which normally
         comprises a specific element (per unit of the product) and an ad valorem element, is subject to a minimum which varies according to the type of product.
      
      4.     For cigarettes, under Article 2(1) of Directive 92/79, (4) that minimum is 57% of the retail selling price inclusive of all taxes, and not less than EUR 60 per 1 000 cigarettes, for
         cigarettes of the price category most in demand.
      
      5.     For fine-cut smoking tobacco intended for the rolling of cigarettes, the minimum rate is fixed in Article 3(1) of Council
         Directive 92/80/EEC (5) at 36% of the retail selling price inclusive of all taxes, or EUR 32 per kilogram.
      
      6.     Directive 95/59 provides certain definitions of tobacco products for the purposes of harmonisation of the structure of excise
         duties on manufactured tobacco.  
      
      7.     Under Article 4(1) the following are deemed to be cigarettes:
      ‘(a)      rolls of tobacco capable of being smoked as they are and which are not cigars or cigarillos …;
      (b)      rolls of tobacco which, by simple non-industrial handling, are inserted into cigarette-paper tubes;
      (c)      rolls of tobacco which, by simple non-industrial handling, are wrapped in cigarette paper.’
      8.     The definition in Article 4(1)(b) is prefigured in recital 14 in the preamble to the directive by the statement that ‘rolls
         of tobacco capable of being smoked as they are after simple handling should … be deemed to be cigarettes for the purposes
         of uniform taxation of these products’.
      
      9.     Fine-cut tobacco for the rolling of cigarettes is a largely self-defining concept.  It is further defined in Article 6 of
         Directive 95/59 by reference to cut width, but that criterion is not in issue in the present case.
      
      10.   In Germany, the definitions in Article 4(1) of Directive 95/59 are transposed, in substantially identical terms, in Paragraph
         2(2)(2) of the Tabaksteuergesetz (Law on Tobacco Duty), as amended.
      
      
       The product in issue
      11.   West Single Packs are a tobacco product sold in Germany.  They are rolls of fine-cut tobacco, each wrapped in a tube of aluminium
         foil open at both ends, of the appropriate dimensions to be inserted into filter-tipped cigarette-paper tubes also sold under
         the brand name ‘West’.
      
      12.   In order to make a cigarette from those components, a smoker inserts a tobacco roll, in its aluminium wrapping, into a cigarette-paper
         tube and then withdraws the wrapping leaving the tobacco inside the tube.  
      
      13.   For that purpose, the manufacturer markets an appliance called a ‘West Maker’, of dimensions and outward appearance similar
         to those of a ball-point pen.  It consists essentially of a tube with a prehensile end and an internal rod or plunger.  The
         prehensile end lightly grips the extremity of the aluminium foil wrapping, which protrudes slightly from the cigarette-paper
         tube.  By sliding the rod or plunger, the smoker then pushes the tobacco roll and paper tube away from the foil wrapping,
         so that they form a complete cigarette ready to be smoked. (6)
      
      
       Procedure
      14.   It appears that the rates of excise duty levied in Germany on cigarettes and on fine-cut rolling tobacco comply with the respective
         minimum rates in the Community legislation, but that Germany applies the lower rate for rolling tobacco to West Single Packs.
      
      15.   The Commission, objecting to that classification, commenced the procedure provided for in Article 226 EC on 18 October 2002,
         subsequently sending Germany a reasoned opinion on 11 July 2003.
      
      16.   Germany maintained its view that its classification was correct.  The Commission therefore brought the present action on 30
         April 2004.
      
      
       Assessment
      17.   The case concerns the excise classification of a single product.  No argument having been put to the Court on the classification
         of other similar, but not identical, products, the only question is whether that specific product falls within the definition
         of a cigarette in Article 4(1)(b) of Directive 95/59.  If it does not, no other classification has been suggested than that
         of fine-cut tobacco for the rolling of cigarettes.
      
      18.   In determining whether West Single Packs fall within the definition of a cigarette, there is only one point of disagreement
         between the parties:  whether the process of assembly constitutes simple non-industrial handling.
      
      19.   At the hearing, the agent for the Commission deftly produced a cigarette using the materials and method I have described in
         points 11 to 13.  It certainly looked very simple.  However, a number of arguments have been put forward on the interpretation
         of Directive 95/59.
      
      20.   Those arguments dwell to a large extent on the wording of Article 4(1)(b) and of recital 14 in the preamble.  I do not think
         however that any detailed guidance can be derived from scrutiny of that wording.
      
      21.   For example, the phrase ‘simple non-industrial handling’ in English (‘einfachen nichtindustriellen Vorgang’ in German) is rendered in French as ‘simple manipulation non industrielle’, a word-order (echoed in other Romance languages) which might imply a relationship between ‘simple’ and ‘non-industrial’
         different from that in English or German, making less significant the absence of a comma between ‘simple’ and ‘non-industrial’
         in either of the latter.  And no common conclusion at all can be drawn in my view from the specific wording of recital 14
         in the three languages:  ‘simple handling’ in English,  ‘simple manipulation manuelle’ in French and ‘einfachen Vorgang nicht industrieller Art’ in German.  It seems unlikely that reference to the full range of language versions could provide any greater clarity.
      
      22.   That degree of semantic spread over the various language versions, and as between the preamble and the enacting terms, in
         my view rules out any strict interpretation of the phrase ‘simple non-industrial handling’, taken in isolation.  Rather, a
         systematic criterion must be found.  The parties agree that, in the interest of legal certainty, that criterion must be clear
         and precise.  I believe that the wording of the definition reveals such a clear and precise criterion when correctly viewed
         in the scheme of the provisions in issue.
      
      23.   Under Community rules, tobacco which is presented in, or can be made into, the form of cigarettes is subject to one of two
         minimum rates of duty and there is, at least for the time being, a significant difference between those two minimum rates.
      
      24.   In that context, it would be undesirable to take as a criterion distinguishing the two categories any kind of cut-off point
         on the sliding scale, on which there are no measurable units, between simplicity and complexity in the process of assembling
         a cigarette from its various component parts.  Wherever and however that cut-off point might be fixed, there would always
         be uncertainty in classifying products which came near it. 
      
      25.   Indeed, I think it may be assumed that on a commonsense interpretation practically any process whereby a smoker makes his
         own cigarettes from manufactured components constitutes simple non-industrial handling.  If the process could not be performed,
         after a modicum of practice, with relative ease and to a moderate degree of competence by the average smoker in order to produce
         an acceptable cigarette, it is unlikely that the components would find a market.
      
      26.   What distinguishes the products defined as cigarettes in Article 4(1) of Directive 95/59 from ‘fine-cut tobacco for the rolling
         of cigarettes’ is thus not the relative simplicity or complexity of the manual assembly of the final cigarette.
      
      27.   A clear distinguishing feature exists however in the fact that all the products defined as cigarettes are (manufactured) ‘rolls’
         of tobacco, whereas the other category is ‘for … rolling’.  Although the contrast may not be as verbally explicit in some
         other language versions as it is in English, there is a clear material distinction between tobacco already made up by the
         manufacturer into a unit of the shape and size of a cigarette, and loose tobacco which must be coaxed into that form by the
         smoker.
      
      28.   In that light, ‘West Single Packs’ must be classified as cigarettes under Article 4(1)(b) of Directive 95/59 and must bear
         the minimum rate of duty laid down in Article 2(1) of Directive 92/79.  Germany has therefore failed to fulfil its obligations
         under those provisions, as alleged by the Commission.
      
      
       Costs
      29.   Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to pay the costs if they have been applied for in
         the successful party’s pleadings.  The Commission has applied for costs.
      
      
       Conclusion
      30.   I am therefore of the opinion that the Court should:
      –       declare that, by applying the tax rate for fine-cut tobacco for self-rolled cigarettes to rolls of tobacco sold under the
         name ‘West Single Packs’, the Federal Republic of Germany has failed to fulfil its obligations under Article 4(1)(b) of Council
         Directive 95/59/EC of 27 November 1995 on taxes other than turnover taxes which affect the consumption of manufactured tobacco
         and Article 2(1) of Council Directive 92/79/EEC of 19 October 1992 on the approximation of taxes on cigarettes;
      
      –       order the Federal Republic of Germany to pay the costs.
      1 –	Original language: English.
      
      2 –	Of 27 November 1995 on taxes other than turnover taxes which affect the consumption of manufactured tobacco (OJ 1995 L
         291, p. 40).
      
      3 –	Of 19 October 1992 on the approximation of taxes on cigarettes (OJ 1992 L 316, p. 8).
      
      4 –	As amended by Council Directive 2002/10/EC of 12 February 2002 (OJ 2002 L 46, p. 26).
      
      5 –	Of 19 October 1992 on the approximation of taxes on manufactured tobacco other than cigarettes (OJ 1992 L 316, p. 10),
         as amended with effect from 1 July 2004 by Directive 2002/10 (cited in the previous footnote).
      
      6 –	Curious smokers over the age of 18 may view this process on the West website, http://www.west.de/tabak/index.php.