CELEX: 61975CC0091
Language: en
Date: 1976-01-21
Title: Opinion of Mr Advocate General Trabucchi delivered on 21 January 1976. # Hauptzollamt Göttingen and Bundesfinanzminister v Wolfgang Miritz GmbH & Co. # Reference for a preliminary ruling: Bundesfinanzhof - Germany. # Case 91-75.

OPINION OF MR ADVOCATE-GENERAL TRABUCCHI
      DELIVERED ON 21 JANUARY 1976 (
            1
         )
      
         Mr President,
      
         Members of the Court,
      
               1.
            
            
               In April 1971 the Miritz undertaking, of Göttingen, withdrew from its bonded warehouse, to put into free circulation, a certain quantity of citrus peel distillates of Italian origin. It contained a concentrated extract of various aromatic substances in a solution of alcohol, classified under customs heading 33.04 II, which is used as raw material in the preparation of drinks covered by heading 22.06.
               On 18 May 1971, the Principal Customs Office in Göttingen ordered Miritz, in view of the alcoholic content of the goods, to pay the ‘equalization charge’ (Ausgleichsabgabe) introduced under the first paragraph of Article 1 of. the German Law of 23 December 1970 concerning the imposition of a special equalization charge on alcohol imports (Gesetz über die Erhebung einer besonderen Ausgleichsabgabe auf eingeführten Branntwein). The applicant contested the assessment before the Finanzgericht Hamburg on grounds based on both national and Community law. In its judgment of 28 July 1972, the court upheld the application on grounds based on national law.
               The Central Customs Office, Göttingen, thereupon appealed to the Bundesfinanzhof, contending that, under the Law of 23 December 1970, the imposition of the aforesaid equalization charge was perfectly legal under both national and Community law.
               In these circumstances, the highest court of the Federal Republic in taxation matters seeks a ruling from this court on the following points:
               
                        1.
                     
                     
                        Does the introduction of a levy which is only imposed upon imports from other Member States of spirits and products containing alcohol and the amount of which corresponds to the total amount of charges falling, as a result of the Distilled Spirit Monopoly, upon similar domestic products, without such products' being expressly subjected to the same equalization charge, amount to an infringement of Article 12 of the Treaty establishing the European Economic Community?
                     
                  
                        2.
                     
                     
                        If the answer to Question 1 be in the negative, does the imposition of the levy referred to under Question 1 above infringe Article 37 (2) of the Treaty establishing the European Economic Community?
                     
                  
                        3.
                     
                     
                        If the answer to Question 1 or 2 be in the affirmative, is the imposition of the levy referred to under 1 above justified by Article 37 (4) of the Treaty establishing the European Economic Community?
                     
                  It appears from information supplied by the interveners, and especially by the German Government and the Commission that the charge in question, which is intended to compensate for the difference between the price of alcohol produced in the Federal Republic and the lower selling price fetched in other Member States, by no means corresponds, either in technical or economic terms, with the general levy imposed on similar domestic products. During the hearing the representative of the Federal Republic confirmed that, quite apart from the technical complications of the relevant machinery employed, the outcome is that the charge is always equal to the difference between the price paid by the monopoly to domestic producers, and the lower price paid in the exporting Member State.
               This charge recalls the ‘special import duty’ on gingerbread which was the subject of the judgment of this Court in Joined Cases 2 and 3/62, Commission v Grand Duchy of Luxembourg and Kingdom of Belgium [1962] ECR 425 and the ‘special charge’ on refrigerators which was the subject of the judgment of this Court in Case 13/63, Italy v Commission [1963] ECR 165.
               It is, therefore, to be distinguished from the charge involved in Case 45/75 (REWE), which is concerned with a direct levy to compensate for the fiscal charge imposed on domestic products and the working costs of the monopoly (Monopolausgleich) levied under the Law of 1922 whereas the charge under consideration in the present case constitutes an independent protective measure designed to compensate for the difference in prices between domestic and foreign products.
               Accordingly, since this Court did not consider it necessary to join these two cases, even for the purposes of oral procedure, I shall scrupulously refrain from confusing the issue, whilst giving full weight to the observations made recently by Mr Advocate-General Reischl in the REWE case and to those of Mr Advocate-General Dutheillet de Lamothe in Case 13/70, Cinzano ([1970] ECR 1098) on the very complicated structure of the monopoly, their analysis of which I cannot improve upon.
               I merely draw attention to the fact that, before entry into force of the Law of 23 December 1970, the German monopoly enjoyed the exclusive right to import into the Federal Republic ethyl alcohol and products containing it. Prior to entry into force of the Law, the function of the equalization charge was, accordingly, performed by this exclusive right, which amounted in practice to a prohibition of imports in the case of certain products.
               A Recommendation addressed by the Commission to the Federal Government on the day before the transitional period expired (JO L 31, 1970, p. 20) is to some extent linked with the Law.
               In the Recommendation, the Commission states that: ‘The unrestricted opening of the German market to products from other Member States before the establishment of a common organization of the markets could … be prejudicial to the sale of German ethyl alcohol derived from agricultural products as well as to the competitiveness of German spirits and as a consequence to the work and standard of living of producers of certain agricultural raw materials.’
               In a reference to Article 37 (4), the recommendation declares that it might become necessary to adopt specific measures pending entry into force of the common organization of the markets and that it is permissible to levy an equalization charge on imports of alcohol and alcoholic drinks.
               In order to comply with it, the Federal Government of Germany opened its frontiers but nevertheless made imports of alcohol subject to payment of the charge, which, in the Commission's view, while certainly in theory permitting imports into the Federal Republic, in practice deprived the operation of any economic point.
               Finally, I must emphasize that the Law was adopted shortly after the judgment of this Court in the Cinzano case, referred to above, the operative part of which reads:
               ‘A duty levied on imports of products from other Member States linked to the existence of a State monopoly and applied for the first time after the entry into force of the Treaty does not amount to an infringement of Article 37 (2) as long as such new charge is imposed on the imported product only to the same extent as on domestic products affected by the monopoly’.
               Although it was the subject of a specific Law, the equalization charge with which we are concerned is, having regard to its structure and character, none the less linked to the monopoly system. And, in as much as the charge covers alcohol manufactured from agricultural products it forms part, like the monopoly, of a national market organization for the agricultural products concerned.
               Shortly before the expiry of the period laid down in Article 38 (3) of the Treaty, raw alcohol manufactured from agricultural products was, by Regulation No 7a of the Council of 18 December 1959, included in Annex II and was thus classified as an agricultural product within the meaning of Articles 38 and 46. It was in fact held by this Court in its judgment of 29 May 1974 in Case 185/73, Hauptzollamt Bielefeld v König [1974] ECR 617 that the validity of this regulation was not affected by the fact that its publication did not take place until more than a year after the expiry of the period in question.
            
         
               2.
            
            
               The first question to be examined is whether the charge in question here constitutes a ‘new’ measure within the meaning of Article 37 (2), so as to fall within the prohibition in Article 37 (1), or under the rules governing the abolition of customs duties and quantitative restrictions between Member States. In other words, so far as this charge is concerned, does Article 37 (2) produce direct effects?
               Since 15 July 1964 (Case 6/64, Costa v ENEL [1964] 585), the Court has recognized Article 37 (2) as producing direct effects and the Court has for some time held that Article 12 operates in the same manner.
               Moreover, in their opinions in Cases 82/71 (SAIL, Rec. 1972, p. 141), and the still pending Cases 45/75 (REWE) and 59/75 (Manghera), the Advocate-General likewise recognized Article 37 (1) as producing direct effects as from 1 January 1970 and on this subject I agree with them.
               There can be no doubt that, viewed in the light of the general prohibition against the introduction of charges having an effect equivalent to customs duties, laid down in Article 12, to which the Bundesfinanzhof refers in its first question, the charge introduced at the end of 1970, which became applicable with effect from 1 January 1971, must be treated as incompatible with that provision.
               But since the measure is closely linked with the operation of a State monopoly, it must be viewed principally in relation to the relevant provision which specifically governs the subject of monopolies and which, moreover, in paragraph (2) refers to Article 12. Article 37 (2) provides as follows: ‘Member States shall refrain from introducing any new measure which is contrary to the principles laid down in paragraph (1) or which restricts the scope of the articles dealing with the abolition of customs duties and quantitative restrictions between Member States’.
               Because of this express rule, the question of interpretation raised concerning Article 12 by the first question from the German court is taken up in the second and third questions, both of which are concerned with the interpretation of Article 37.
               The first question concerns the classification of the charge viewed in the light of the ‘standstill’ rule, laid down in Article 37 (2), concerning the discrimination referred to in paragraph (1) and, in the present case, in terms of customs charges and measures having equivalent effect.
               Since the charge replaces a general ban on imports, except on the part of the State monopoly, thus introducing what is, at least technically speaking, a less severe restriction than the previous one, should it not be considered as a measure intended as a restructuring of the monopoly rather than a ‘new’ restrictive measure?
               This question could perhaps have been asked if, subject to a very clear time-limit on its validity, the charge had been introduced during the transitional period as a stage in the adjustment of the State monopoly provided for under paragraph (1). But we know that the measure at issue, which was not even made subject to a time-limit, was adopted well outside the time-limit prescribed by the Treaty for such adjustment It can therefore no longer be justified as a stage in a process which by now ought already to have been completed. Moreover, after the end of the transitional period, what is important is no longer infringement of the ‘standstill’ in the customs field but the fact of the continuation of a set of rules in connexion with the monopoly which, although they have been changed, continue to conflict with the rules of the Treaty on the free movement of goods within the Community.
               But, in order to establish whether the Treaty absolutely prohibits the introduction of a charge of the kind under consideration above, it is necessary to explore the meaning of the provisions of paragraph (4) which reads as follows: ‘If a State monopoly of a commercial character has rules which are designed to make it easier to dispose of agricultural products or obtain for them the best return, steps should be taken in applying the rules contained in this article to ensure equivalent safeguards for the employment and standard of living of the producers concerned, account being taken of the adjustments that will be possible and the specialization that will be needed with the passage of time’.
               Notwithstanding the rather tentative wording of this provision in some translations of it, particularly the. Italian, which might create the impression that the authors regarded it as a recommendation rather that an instruction, I am of the opinion that it must be interpreted, in conformity with other translation, such as the German, as imposing a straightforward obligation on both the national and the Community authorities responsible for implementing the provisions of Article 37.
               In carrying out the adjustment of monopolies prescribed by paragraph (1), national authorities must, therefore, in the case of monopolies of the kind covered by paragraph (4) adhere to the conditions laid down by this provision in drawing up new rules for the abolition of any discrimination whatsoever between the subjects of Member States regarding the conditions under which goods are procured and marketed.
               The Commission and the Council must take due account of these requirements both when, in conformity with the provisions of Article 43 (3), the common organization of the market is replacing the national market organization of which the monopoly is an integral part (and, despite the provisions of Article 43, the obligation remains notwithstanding opposition from the State) and in adopting any measures to facilitate readjustment of the national organization, which could mean the application of various kinds of intervention at both national and Community level.
            
         
               3.
            
            
               Consideration can now be given to the question whether the provisions of paragraph (4) avail to take charges of the kind in issue here out of the prohibition, embodied in Article 37 (1) and (2), against adopting and maintaining, after the end of the transitional period, measures contrary to the fundamental rules and principles of the common market, such as the prohibition of charges levied on goods by reasons of their crossing the internal frontiers of the Community and the prohibition of discrimination on grounds of nationality.
               In appearance, this provision does not possess any of the characteristic features of the Community safeguard clauses providing for measures of an exceptional and temporary nature (because, of course, they make it possible to derogate from the fundamental rules and principles of the common market) and for the Community executive to exercise supervision, usually in the form of prior, or at least ex post facto, authorization in order to keep the exceptions to the minimum necessary to achieve the desired objects.
               In view of the fact that, in the present case, no limits have been prescribed, if paragraph (4) were to be interpreted as providing powers of derogation, the consequence would be that each Member State would, as regards monopolies affecting agricultural activities, be virtually free to perpetuate, indefinitely, a situation which offends against the requirements of paragraph (1). But this is incompatible with the force which the authors of the Treaty intended, by imposing a specific time-limit, to give to paragraph (1) and with the crucial importance attached by the Treaty as a whole to the prohibition of discrimination based on nationality and to unrestricted application of the rules on the free movement of goods.
               Such a consequence would go further than the purpose of the provision, which was designed to mitigate the effects of sudden changes in the status quo when the Treaty came into force.
               To adopt an interpretation different from the one which I have recommended would be to justify the perpetuation of a situation which conflicts with those fundamental rules; it would indeed constitute the State's failure to act in accordance with the obligation placed upon it by Article 37, namely not to have, within the transitional period, adjusted its monopoly to conform with the aforesaid rules in accordance with the requirements laid down in paragraph (4) — and this would amount to justifying also the adoption of new measures of derogation.
               Such a consequence cannot, in my opinion, be accepted because, as we have seen, it is not required by the wording of the provision and would certainly ill accord with the Community system. In my view, the provisions of paragraph (4) must be interpreted as an instruction laying down guidelines which the authorities indicated above must follow in carrying out the other requirements of Article 37. In this connexion, the safeguards for the employment and standard of living of the producers concerned, to which the provision at issue refers, must be pursued and achieved through machinery and methods compatible with the basic principles laid down in the first two paragraphs of Article 37 and, in particular, with the absolute prohibition of discrimination between subjects of the Member States and the requirement to refrain from any measure which restricts the scope of the articles dealing with the abolition of customs duties and quantitative restrictions. In this context it should be noted that the provisions of Article 37 (2) make no distinction calculated to make the provisions dealing with the prohibition of quantitative restrictions prevail over those dealing with the abolition of customs duties.
               Neither the letter nor the spirit of the rule appears, therefore, to provide justification for a restrictive interpretation of the prohibitions laid down in Article 37 which might limit them to the field of quantitative restrictions and prevent them, by virtue of paragraph (4), from being applied to customs duties and measures having equivalent effect in respect of agricultural products.
               I would also say that although, during the transitional period, Article 37 allowed exceptions to be made from the prohibition of quantitative restrictions, it was in no way intended to affect the application of the general rules dealing with the prohibition and the progressive abolition of customs duties and charges having equivalent effect. The adoption of a measure of this kind could not, therefore, even in the case of agricultural products, be justified because of its involvement with the operation of a State monopoly.
            
         
               4.
            
            
               This conclusion, which is based on interpretation of the Treaty, is, moreover, in keeping with the principle underlying the judgment in Case 48/74 (Charmasson v Ministro dell'Economia e delle Finanze) [1974] ECR 1383). In that judgment, the Court held that a national market organization, to the extent to which its operation derogates from the fundamental rules on the free movement of goods within the Community, is permissible only until the end of the transitional period and that, during that period, the national organization must adapt itself to the fullest possible extent to the requirements of the common market with a view to facilitating the establishment of the common agricultural policy. The fact that the common policy was not established, as it ought to have been, within the period laid down in Article 40 (1) of the Treaty in no way relieves the States of the obligation to adapt the national organization within the transitional period to the rules provided for the establishment of the common market. The Court indeed held that such adaptation is all the more necessary since the absence of a common agricultural policy is contrary to the requirement of Article 3 (d) of the Treaty.
               This interpretation, which was laid down in connexion with a dispute which was more particularly concerned with Article 33 of the Treaty, which concerns the abolition of quantitative restrictions between Member States, cannot fail to apply with the same force to the general principle prohibiting customs duties and measures having equivalent effect, without which the purpose of the prohibition of quantitative restrictions would be likely to be thwarted. This rule is a fortiori valid as regards new restrictive measures adopted after the end of the transitional period.
               The Council Decision of 20 December 1969, quoted as an example by Mr Advocate-General Reischl, which, within the framework of the development of a common agricultural policy, expressly provided, in the case of some States, for derogations in respect of the levying of compensatory charges and, on a temporary basis, the maintenance in force, after the end of the transitional period, of a system of minimum prices, does not conflict with the principle arising under the Treaty and upheld by the jugdment in Charmasson that, after the end of that period, the fundamental principles on which the common market is based must, in their entirety be also applied in agriculture, even regardless of the existence of a common organization of the market. Nor, provided that express provision is made for them by a decision of the Council, adopted as part of a series of provisions for the progressive establishment of a common organization of the market, does this principle absolutely preclude the possibility of temporary derogations in cases where, before the end of the transitional period, special considerations have, in clearly defined sectors, required that, as a temporary measure, the general rule should be partially modified. In other words, such derogations are allowed essentially as protective measures and subject, therefore, to all the restrictions and to observance of the general criteria which govern exceptional measures of a derogative nature. On the other hand, the decision quoted could not be interpreted as implying the freedom of the States to maintain unilaterally and for an indefinite period a situation henceforth manifestly in conflict with a directly applicable provision of the Treaty.
            
         
               5.
            
            
               The failure of the competent authorities progressively to adapt State monopolies, in due time, to the requirements of the Treaty may certainly make it less easy to achieve the objectives provided for in paragraph (4). This is a difficulty which is due not to a defect of the system established by those who drew up the Treaty but to failure to fulfil the obligations laid down by it. Nor, as the Commission has itself admitted, is it possible to overlook that it is itself partly to blame. It was, in fact, only a few months ago that it informed the Federal Government of its new attitude on the subject under consideration, which certainly left the Federal Government with little time in which to adopt the necessary measures. This special circumstance impelled the Commission to ask the Court to grant a ‘period of grace’ to enable the Federal Republic to fulfil its obligations in this respect.
               Whilst appreciating the practical requirements involved in the protection of economic and social interests which, as they affect a class of national trader, cannot be ignored, I cannot see how the Court, in giving a preliminary ruling on the interpretation of the Treaty, can postpone the effect of rules which are directly applicable from the end of the transitional period and do so in respect of an individual case or, at any rate, in the light of a particular situation, without thereby invading a province which is denied to it.
               The jurisdiction conferred on the Court by Article 177 does not, of course, allow it to apply the law to an individual case. I should add that the rule in Article 174 of the EEC Treaty, which is basically concerned with the Court's power to restrict the retroactive effect of a judgment annulling a regulation so as to ensure that allowance is made for, in particular, acquired rights, does not in any way lend itself to extension, outside the type of proceedings for which it was designed, to national as distinct from Community measures, and in any case not in order to limit the effect as regards the past but in fact for the future!
               In interpreting the law it is, of course, desirable and necessary to have regard to economic and social realities and the requirements they impose, but there are limits beyond which the Court may not go unless it wishes, by invading the province of the legislator to undertake a different function from that which is proper to it. Practical considerations which, whilst important, are invariably conditioned by a particular and contingent situation, cannot influence a judicial body, whose jurisdiction is solely to interpret the law, to such an extent as to impel it in fulfilling its particular function to subvert the system established by the authors of the Treaty.
               On the other hand it will be for the Community Executive, in exercising the responsibility and powers conferred on it by the Treaty, to find the most suitable means of enabling the Federal Government to meet the foreseeable difficulties by emergency measures where, on a temporary basis, these prove necessary to mitigate the adverse effects, for the class of national trader concerned, of the full application of the Treaty pending a satisfactory solution, such as may be found within the framework of the common organization of the market which the Council has a duty to establish, of the problems which arise. These responsibilities must be discharged by the Community bodies with a degree of care commensurate with the fact that their previous omissions have helped to perpetuate the present regrettable situation.
            
         
               6.
            
            
               If, contrary to what I have said, the Court were to hold that Article 37 (4) allows a State which has a monopoly to continue, by levying compensatory charges on imported products, unilaterally to bring the price of those products up to that of domestic products subject to the monopoly, it would none the less be necessary to ensure that the imported product did not, as a result of the charge, find itself in so far as the final price is concerned, in a more unfavourable position than the corresponding domestic product.
               In view of the overservations submitted during the proceedings, the measure concerned would for this purpose have to satisfy the following conditions:
               
                        1.
                     
                     
                        When the amount of the equalization charge is fixed, the first reference point to be taken into account is the actual average price for the domestic product and not the average price prevailing among marginal producers, as appears to have been the case here. It must be borne in mind that the law with which we are concerned is in this connexion based on the prices at distilleries with an average annual production of 500 hectolitres, whereas, in its Recommendation of 1969, the Commission had indicated that the level of domestic prices was to have been fixed on the basis of the average production price at distilleries with a capacity of 10000 hectolitres.
                        The second reference point must not, as in the present case, be the minimum price fetched in the exporting State or State of origin but, if a flat-rate basis is preferred to identification in each separate case of the price actually paid, at least the average price fetched in that State. However, the price limits referred to in the German Law are such as to endow domestic production with a degree of protection which goes beyond the declared purpose of price equalization.
                     
                  
                        2.
                     
                     
                        Again with a view to preventing unjustified discrimination, account must be taken of the transport costs borne by the imported product before reaching the frontier of the importing State.
                     
                  
                        3.
                     
                     
                        In order to produce actual and not merely apparent parity between the selling price of imported and domestic products, it would also be necessary to take account of any privileges which, in one form or another, the monopoly affords to the producers of the corresponding national products and those trading in them.
                     
                  It would also be worth considering whether the range of products to which the charge applies should not be restricted to products which are directly subject to the monopoly in order to avoid creating obstacles to the movement of goods which are not necessary for the working of the national organization of the market which is linked with the monopoly. On the basis of this consideration it might, for example, emerge that there was no justification for levying the equalization charge on citrus peel distillates in order to protect domestic producers of potatoes intended to be marketed in the form of alcohol.
               Observance of the aforesaid conditions would be imposed by the general principle, embodied in the case-law of the Court on the subject of safeguard clauses, that in the applications of derogative provisions priority must be given between the options available to those intervention methods which cause the least possible disturbance in the working of the common market.
            
         In conclusion, I advise that the Court should, in replying to the question referred by the Bundesfinanzhof, rule that, after the end of the transitional period, Article 37 of the EEC Treaty no longer permits a variable levy to be imposed on imports of products coming from another Member State for the purpose of offsetting the difference between the selling price of the product in the exporting State and the higher price paid by a national monopoly to domestic producers of the corresponding product.
      The provision in Article 37 (4) does not endow the States with the power unilaterally to avoid observance of the principles and rules to which the provisions in paragraphs (1) and (2) refer.
      Alternatively, if the Court were to find it possible to place a different interpretation on Article 37 (4), it should lay down the limits to which, along the lines indicated above, the application of the provision must be subject.
      (
            1
         )	Translated from the Italian.