1 BY JUDGMENT OF 1 DECEMBER 1965, THE COURT FOUND INCOMPATIBLE WITH THE TREATY ALL REFUNDS CORRESPONDING TO DUTIES AND TAXES WHICH ARE IMPOSED NOT ON THE PRODUCTS BUT ON THE PRODUCER UNDERTAKINGS AS SUCH AND RECOGNIZED THAT, IN ADDITION, THE REPAYMENT AT ISSUE TENDED TO REIMBURSE INTERNAL TAXATION WHICH WAS WITHOUT QUESTION IMPOSED DIRECTLY OR INDIRECTLY ON THE PRODUCTS AND WAS THEREFORE OF THE TYPE ENVISAGED BY ARTICLE 96 . HOWEVER, TAKING INTO ACCOUNT THE CHARACTERISTICS OF THE FLAT-RATE SYSTEM CHOSEN BY THE ITALIAN REPUBLIC FOR THE CALCULATION OF THE SAID REFUNDS, THE COURT IMPOSED ON THE DEFENDANT THE BURDEN OF PROVING THAT THE AMOUNT OF THE REPAYMENTS AT ISSUE CONFORMS IN ALL CASES TO THE REQUIREMENTS OF ARTICLE 96 .
2 FOLLOWING THE JUDGMENT OF 1 DECEMBER 1965 THE ITALIAN GOVERNMENT SENT TO THE COMMISSION A SERIES OF ANALYTICAL CARDS RELATING TO 58 OF THE 473 PRODUCTS ON WHICH EXPORT REFUNDS WERE MADE, AS WELL AS A NUMBER OF GENERAL SURVEY TABLES AND AN EXPLANATORY MEMORANDUM .
3 THE COMMISSION CONSIDERED THESE DOCUMENTS TO BE INCONCLUSIVE AND REQUESTED DATA FROM THE ITALIAN GOVERNMENT ON SEVEN PRODUCTS WHICH IT HAD CHOSEN AS BEING PARTICULARLY REPRESENTATIVE . THE DATA SUPPLIED ON THESE PRODUCTS AND, MORE PARTICULARLY, ON ONE OF THEM, WERE CHECKED BY THE COMMISSION WHICH, FOLLOWING THESE INVESTIGATIONS, CONTESTED THE TAKING INTO ACCOUNT, IN THE CALCULATION OF REFUNDS, OF A SUBSTANTIAL PART OF CUSTOMS DUTIES LISTED IN THE TABLES SUPPLIED BY THE ITALIAN GOVERNMENT .
4 AS REGARDS THE INTERNAL TAXATION, THE COMMISSION ACCEPTED THE FIGURES RELATING TO TAXES ON MANUFACTURE AND CONSUMPTION PAID BY UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS, AND MERELY MADE A NUMBER OF OBSERVATIONS ON THE ITEM " ELECTRIC ENERGY ".
5 THE COMMISSION DID HOWEVER EXPRESS STRONG RESERVATIONS REGARDING THE INCLUSION, IN THE CALCULATION OF THE AMOUNT OF REFUNDABLE TAXATION, OF TAXES PRESUMED TO HAVE BEEN PAID BY THE SUPPLIERS OF UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS; THIS RESERVATION RELATED BOTH TO THE ACTUAL IMPOSITION OF THOSE CHARGES IN THE CASES EXAMINED AND TO THE EXTENT TO WHICH THEY ACTUALLY AFFECTED THE PRODUCTS USED IN THE FINAL PROCESSING STAGE .
6 THE APPLICATION WAS BROUGHT BY THE COMMISSION ON THE BASIS OF ARTICLE 96 OF THE EEC TREATY WHICH PROVIDES : " WHERE PRODUCTS ARE EXPORTED TO THE TERRITORY OF ANY MEMBER STATE, ANY REPAYMENT OF INTERNAL TAXATION SHALL NOT EXCEED THE INTERNAL TAXATION IMPOSED ON THEM WHETHER DIRECTLY OR INDIRECTLY ".
7 THIS PROVISION, WHICH RELATES ONLY TO INTERNAL TAXATION, DOES NOT PERMIT ACCOUNT TO BE TAKEN, FOR THE PURPOSES OF THIS DISPUTE AND IN ORDER TO ESTABLISH WHETHER THE REPAYMENTS AT ISSUE ARE JUSTIFIED, OF THE AMOUNT OF CUSTOMS DUTIES . THIS FACTOR MUST THEREFORE BE EXCLUDED IN THIS CASE, SINCE THE ONLY CHARGE WHICH CAN BE TAKEN INTO ACCOUNT IN APPRAISING THE COMPATIBILITY WITH THE TREATY OF THE REPAYMENTS AT ISSUE IS THE EFFECT, WHETHER DIRECT OR INDIRECT, OF INTERNAL TAXATION PROPERLY SO-CALLED .
8 AS REGARDS THE LATTER, THE COMMISSION HAS ACCEPTED, WITH THE EXCEPTION OF A SINGLE ITEM WHICH IS RELATIVELY UNIMPORTANT, THE ACCURACY OF THE FIGURES PROVIDED BY THE ITALIAN GOVERNMENT RELATING TO TAXATION PAID DIRECTLY BY UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS .
9 AS FOR THE TAXATION PAID BY SUPPLIERS OF UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS, IT MUST BE STATED THAT THE POSSIBILITY OF SUCH INDIRECT CHARGES CANNOT BE EXCLUDED SINCE THE COMMISSION MERELY INVOKED THE IMPOSSIBILITY OF CHECKING, IN THE CASES EXAMINED, THE EXISTENCE AND AMOUNT OF THESE CHARGES BY REASON OF THE FLAT-RATE SYSTEM APPLIED BY THE ITALIAN AUTHORITIES .
10 IT FOLLOWS FROM THE EVIDENCE SUPPLIED BY THE ITALIAN GOVERNMENT, REGARD BEING HAD TO THE CRITICAL OBSERVATIONS DRAWN UP BY THE COMMISSION, THAT WHEREAS IN CERTAIN CASES THE AMOUNT OF THE REPAYMENTS DOES NOT EXCEED THE AMOUNT OF THE TAXATION REFERRED TO BY ARTICLE 96, THE SYSTEM LAID DOWN BY ITALIAN LAW LEADS IN OTHER CASES TO REFUNDS WHICH EXCEED THE SAID AMOUNT .
11 IT APPEARS THEREFORE THAT THE SYSTEM ESTABLISHED BY THE ITALIAN LEGISLATION DOES NOT GUARANTEE THAT REPAYMENTS IN ALL CASES REMAIN WITHIN THE LIMITS FIXED BY ARTICLE 96 .
12 IN THESE CIRCUMSTANCES, AND REGARD BEING HAD TO THE UNCERTAINTY CREATED BY THE EXISTENCE IN THE CALCULATIONS OF FACTORS WHICH IT IS IMPOSSIBLE FOR THE COURT TO ASSESS IN THE CONTEXT OF THE PRESENT DISPUTE, IT IS INCUMBENT UPON THE ITALIAN GOVERNMENT, IN COOPERATION WITH THE COMMISSION, TO TAKE THE MEASURES NECESSARY TO ENSURE THAT THE REFUND SYSTEM CONSTITUTING THE SUBJECT OF THE DISPUTE IS MADE TO CONFORM WITH THE REQUIREMENTS OF THE TREATY .