CELEX: 61973CC0131
Language: en
Date: 1973-11-22 00:00:00
Title: Opinion of Mr Advocate General Mayras delivered on 22 November 1973. # Criminal proceedings against Giulio and Adriano Grosoli. # Reference for a preliminary ruling: Tribunale civile e penale di Trento - Italy. # Administration of tariff quota. # Case 131-73

OPINION OF MR ADVOCATE-GENERAL MAYRAS
      DELIVERED ON 22 NOVEMBER 1973 (
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         Mr President,
      
         Members of the Court,
      As the Council declared in its preamble to Regulation No 14/64 of 5 February 1964 on the progressive establishment of a common organization of the market in beef and veal, the difficulties of supply within the Community in respect of meat intended for processing ‘can be eliminated by means of tariff quotas on imports of frozen meat from third countries’.
      The technique of tariff quotas is frequently used in the common market. Its purpose is to allow a given quantity of goods (quota volume) to be imported for a given period of time at a lower than normal rate of duty (quota tariff).
      This technique consists of a tariff scale fixed for a period of time and for a limited quantity.
      Unlike national quotas, Community quotas hold good for the whole of the Community, without exception in any region; all importers must be able to make use of them under the same conditions; in short, the goods to be imported are subject to a uniform law.
      These tariff quotas can be fixed by unilateral decision on the part of the competent Community authorities, or by agreement.
      This applies particularly to quotas bound within the framework of the General Agreement on Tariffs and Trade (GATT).
      Apart from tariff quotas, it continues to be possible for traders to import the same product but under the normal conditions laid down by the common customs tariff and under any agricultural regulations which may apply.
      As regards frozen meat, a first annual quota of 22000 metric tons was opened by a tariff agreement, signed in Geneva in 1962, following the Dillon negotiations under the provisions of GATT and bound at 20 %.
      As the common customs duty for frozen meat is exactly 20 %, the fact that this was the level at which the tariff was fixed means that meat imported as part of this quota is exempt from the levy provided for under the common market organization.
      In contrast to what is laid down for other goods covered by the common customs tariff, no condition is imposed in regard to use.
      Article 4 (1) of Regulation No 14/64 of the Council refers to this first tariff quota. It also provides ‘that an additional quota may be fixed for imports of frozen meat from third countries’, but specifies ‘that such meat shall be assigned, subject to customs control, to processing’.
      This was the case of a quota fixed by unilateral decision.
      Thus there exist side by side a special system for importing frozen meat intended for processing, as provided for under Article 4 of Regulation No 14/64 and, moreover, repeated under Article 14 of Regulation No 805/68 finalising the market organization, and the system based on the annual quota available under GATT.
      For the distribution and administration of this latter quota, particularly for the years 1968 and 1969, the Council made provision in the form of Regulations by virtue of which, according to Article 3 of Regulation No 92/68, ‘the quotaparts shall be managed by each Member State in accordance with its own administrative provisions’, and in the words of Article 2 of Regulation No 110/69, ‘the Member States shall, as regards their own quota-part, determine the conditions of eligibility for access to the tariff quota concerned and shall manage their quota in accordance with their own administrative provisions …’
      In Italy, a country which, during the years in question, has been favoured with a greater part of the quota, the Minister for External Trade has, by means of circulars, controlled the way in which the national quota-part has been allocated within the country and, amongst other things, has laid down that importers ‘shall be under a duty to make a declaration undertaking to use the consignments of meat assigned to them exclusively for direct consumption and to submit to the controls introduced for this purpose’.
      Since these controls were put into operation in the province of Trent, the Revenue enforcement authorities have established that the GATT consignment of frozen meat for 1968 and 1969, which formed part of the quotas assigned to a firm of importers, Grosoli & Co., whose registered office is at Cadoneghe, in the province of Padua, had in part been converted by those who purchased it into smoked or salted meat or into sausages.
      In consequence of this the partners, Giulio and Adriano Grosoli, were charged before the Tribunale di Trento (sezione penale) with offences which included breaches of Article 110 of the Italian Penal Code and Article 102 of the Customs Law in that, acting in concert, they had diverted a given quantity of frozen beef and veal to uses other than direct consumption and thus avoided payment of levies on agricultural products applicable to imports from third countries.
      The Tribunale di Trento (sezione penale) stayed proceedings and, in its first question, asks for a preliminary ruling on the question whether, under the provisions of Article 3 of Regulation No 92/68 and of Article 2 of Regulation No 110/69, taken together, Member States can, in respect of their quota-part of frozen meat under the GATT quota, adopt provisions designed to ensure that the consignement is put to a particular use.
      Secondly, if your reply to this first question were to be in the affirmative, the Italian court asks whether a Member State could require importers who had not put their consignment to the required use to pay fines calculated on the basis of the unpaid levy.
      Discussion
      According to one of the principles established by decisions of this Court, ‘to the extent that, in order to ensure proper working of the common market in agriculture, the Member States have conferred legislative powers in tariff matters on the Community, they no longer have power to make legislative provisions in this field.’
      That is the form of words used in the judgment of 18 February 1970 (Case 40/69, Hauptzollamt Hamburg-Oberelbe v the Firm of Paul G. Bollmann, Rec. 1970, p. 69).
      In the absence, therefore, of provision to the contrary, it is not possible for Member States, with a view to ensuring that a directly applicable Community rule is observed, to adopt measures whose object is to modify its scope or add to its provisions.
      Although, on the same basis, implementation of Community legislation is usually left to the national authorities and this is effected ‘in accordance with the formal and procedural requirements of national law’, those authorities, as this Court has recalled on more than one occasion, may intervene to do no more than take the steps necessary to ensure unqualified observance of the Community provisions.
      Similarly, the powers assigned to Member States by the Community regulations give no authority to adopt measures which create exceptions to a specific rule of common application which is necessary for the working of a market organization mechanism (judgment of 30 November 1972, Case 32/72, Wasaknäcke, Rec. 1972, p. 1188).
      If, therefore, as is the situation in the case of frozen beef and veal, originally under Article 4 of Regulation No 14/64 and later put into operation by a decision of the Council, the policy line of the Common Customs Tariff applied to the Community's annual quota under GATT had required meat imported as part of the quota to be put to a specific use, such as the processing industry, there would have been no doubt about the inability of a Member State to decide that the meat must be reserved for direct consumption.
      But, should it be concluded a contrario, that in the absence of a condition of Community application, Member States have, in regard to their quota-part, power to adopt provisions prescribing a use for the imported product?
      I do not think so and I propose to demonstrate:
      
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               that, as the residual jurisdiction of Member States in the field of tariffs must be strictly interpreted, it is all the more necessary for powers to adopt such measures to be seen to have been expressly conferred on the States by the institutions of the Community;
            
         
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               that the States must administer a Community quota in such a way as to ensure compliance with the principle of non-discrimination between importers or users whether they are nationals of the same State or traders who are citizens of different Member States;
            
         
               3.
            
            
               that the rules to be applied to the tariff quota fixed under GATT cannot, in terms of objective, be dissociated from the rules established by the common organization of the market in beef and veal.
            
         On the first point, the Italian Government takes Article 3 of Regulation No 92/68 and Article 2 of Regulation No 110/69 together and from them draws what it regards as the obvious conclusion that the power to manage its quota-part in accordance with its own administrative provisions, and, above all, to decide on what conditions advantage may be taken of the quota concerned, means that a Member State has also the right to prescribe the use to which the product must be put.
      Without going into the argument developed at the bar by counsel for the Grosoli partners on the concept of ‘gestio negociorum’ I take the view, in common with the Commission, that management of a quota-part from the tariff quota of necessity implies certain conditions for eligibility being laid down in advance.
      In effect, whether the state uses chronological order as the yardstick or whether it operates a system of distribution under which each importer is allotted a quota, it is entitled, in so far only as the management of its quota is concerned, to adopt administrative measures which cover the conditions of eligibility for an allotment. These conditions depend in the first case on when the goods - are produced at the Customs and, in the second case, on registration of importers and delivery of import licences to each of them.
      But, whatever the method used, management of the quota does not require or, indeed, authorize, a decision by the state that the imported goods must be put to a given use; even though, as far as it was concerned, the Council, which was particularly conscious of the small proportionate tonnage of the GATT quota in comparison with the total imports of meat by Member States, adjudged it unnecessary to prescribe a use for the frozen meat imported as part of the quota.
      Nor, moreover does it seem possible to give the Regulation of 1969 a wider meaning as regards the powers of Member States than that of 1968 solely on the ground that it refers to ‘conditions of eligibility to receive a share of the quota’. In fact, the only clause of significance which can be found in the preamble to the second regulation does no more than recall ‘that it seems best to leave each Member State to decide on what basis to manage its own share’. It would, therefore, seem that the concept of management includes the power to determine the conditions of eligibility.
      Finally, it should be noted that, on the subject of the additional tariff quota referred to in Article 4 of Regulation No 14/64, which expressly reserves frozen meat imports for the processing industry, the Council used the following form of words in Article 5 of its Decision of 13 October 1964:
      ‘The quotas shall be managed by each Member State in accordance with its own administrative provisions.’
      And subsequent regulations, including Article 3 of Regulation No 92/68 dealing with the GATT quota, have adopted a virtually identical phraseology. A comparison of the wording employed for, respectively, the additional quota and the GATT quota confirms, if necessary, that the powers of distribution possessed by the States do not include the power to require that the imported product must be used for a specific purpose.
      On the second point, the general rule against discrimination, which emerges from the Treaty establishing the European Economic Community as a whole and which is expressly written into the second paragraph of Article 40 (3) of the Treaty, dealing with the operation of the common market in agriculture, undoubtedly implies that, because there is a limitation on the quantities which can be imported at a reduced tariff, the distribution of Community quotas between dealers is effected in accordance with uniform rules in each Member State.
      That being so, to allow that the national authorities could impose conditions on the use of agricultural products imported under tariff arrangements of the kind with which we are dealing would inevitably infringe the principle of equal treatment; this is because the outcome of exercise by each State of its power to prescribe a use for the product would be that some national users could and some could not have access to the quota. Similarly, if every State were free to exercise the degree of control which it pleased, whether on account of the state of the domestic market or even for social considerations of the kind referred to at the bar by the Italian Government, the outcome would be differentiation between importers or users in the various member countries.
      Such a situation would be contrary to the requirements of a single market organization.
      As counsel for the Grosoli partners demonstrated, Italian administrative practice, arising from the relevant directives, in essence constitutes restriction of those entitled to receive import permits to a given class of trader, though this result may become evident only after the event. A practice of this kind is comparable with a measure having equivalent effect to a quantitative restriction, and appication of such restrictions is prohibited, in the absence of any provision to the contrary in the Regulations or of an exception agreed by the Council on the basis of a proposal from the Commission under the voting procedure provided for in Article 43 (2) of the Treaty. It is clear that the Regulations with which this case is concerned have not been designed with this end in view or been adopted under that procedure. If the Italian Government wanted to encourage direct consumption of frozen meat, a new development which, it contends, would improve social conditions for poorer families, it would have to do it by means other than by those involving administrative control of the quota, which, moreover, raises the question whether it may not create difficulties for producers of fresh, refrigerated or frozen meat in other Member States. Even if the possiblity were conceded that access to the frozen meat quota originally intended, in the main, for the processors, could for social reasons have been extended to direct consumers, there could be no question whatever of allowing the latter to be the only ones to profit from it.
      There is more to this question, however. When Community rules on the market in beef and veal are compared with the system of tariff quotas in operation under GATT at the material time, there are further reasons of substance for interpreting the provisions of Regulations No 92/68 and No 110/69 as meaning that they do not confer power on the Member States to make a unilaterally imposed use for the imported meat a condition of access to it.
      From the preamble to Regulation No 14/64 it is reasonable to conclude that it was the Council's intention that the shortage of beef and veal available for processing was to be mainly if not exclusively offset by frozen meat imported as consignments under tariff quotas clearly without distinction whether it was the GATT quota or the additional quota.
      The fact is that the additional quota was exclusively reserved for processing under Customs provision. That is the clear effect of the wording of Article 4 (1) of Regulation No 14/64 and of the decisions of the Council introducing the quota. As regards the GATT quota, it is reasonable to suppose that it could equally well, though not necessarily exclusively, be used for commercial processing. It is true that Regulation No 805/68, which, from 29 July 1968, replaced the provisional Regulation of 1964, makes no express reference to it, frozen meat intended for processing having the advantage since then of special import agreements which are the subject of the provisions of Articles 14 and 19 of the new Regulation. It is also true that Regulation No 110/69 now makes express reference only to Article 111 of the Treaty and does not even mention Regulation No 805/68. Nevertheless, part of the preamble declares that ‘allocation of the quota must pay regard, amongst other things, to the needs of each Member State and to the existing stocks of frozen meat in certain Member States as a result of intervention measures; these needs are assessed with due regard to, amongst other things, imports of the meat concerned from third countries during previous years and foreseeable developments in 1969’. This preamble has no meaning except on the basis of an implied reference to the common organization of the market in beef and veal.
      If, therefore, one accepts that this quota could have been, in part, intended for direct consumption, the possibility cannot be excluded that it could equally well have continued to be intended for processing. In reality, this is not so because frozen meat imported under the quota only pays 20 % Customs duty and because it escapes the levy from which it is exempt under the general rules of the common market organization.
      Even if the Council had not thought fit to prescribe a specific use for meat imported under the quota, it could not have left the Member States free to impose a similar condition on their own account.
      Finally, it is not without interest to note, in Article 10 (2) of Regulation No 14/64, a provision under which ‘meat which has been frozen in a Member State shall be disposed of in such a way as not to disturb the Community market in fresh meat’. Behind the concern expressed in these words lies an interest in the conditions under which frozen meat imports are utilized, even if as a consignment under GATT.
      To allow Member States the freedom to restrict such a consignment to use for direct consumption would have been liable to affect the prices of fresh meat produced in the Community. And the body of Community rules which govern the meat market constitute a whole which must be maintained intact if the system is to function correctly. Consequently, it is unacceptable that the States should be empowered to adopt measures whose object is manifestly contrary to that being pursued by the Community authorities.
      For all these reasons, taken as a whole, I recommend that you rule that the Member States have no power to prescribe, as a condition of access to the 22000 metric tons quota available under GATT, the use for a specific purpose of imported frozen meat.
      As this recommendation means that the first question referred by the Tribunale of Trent should be answered in the negative, it is, in my view, unnecessary to go into the second question.
      (
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         )	Translated from the French.