1 By judgment of 6 June 1990, which was received at the Court on 13 July 1990, the Tribunal de Grande Instance (Regional Court), Paris, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Commission Regulation (EEC) No 1761/77 of 29 July 1977 laying down rules for the application of Regulation (EEC) No 2742/75 (Official Journal 1977 L 191, p. 90) (as amended by Commission Regulation (EEC) No 3609/84 of 20 December 1984, Official Journal 1984 L 333, p. 38), Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector (Official Journal 1981 L 177, p. 4) and Commission Regulation (EEC) No 1443/82 of 8 June 1982 laying down detailed rules for the application of the quota system in the sugar sector (Official Journal 1982 L 158, p. 17) (as amended by Commission Regulation (EEC) No 434/84 of 9 February 1984, Official Journal 1984 L 51, p. 13).
2 Those questions were raised in proceedings between the only manufacturer of isoglucose in France, Roquette Frères SA ("Roquette") and Direction Générale des Impôts (Directorate General for Taxation).
3 Isoglucose is a liquid sweetener made from the glucose present in starch. The starch is obtained from cereals, usually maize. The glucose present in starch can be converted, using a process known as "isomerization", into a solution containing almost equal proportions of glucose molecules and fructose molecules - isoglucose. The isoglucose thus produced has a chemical composition and sweetening power close to those of sugar obtained from sugar beet or sugar cane.
4 Roquette succeeded in increasing the output of that operation. After obtaining isoglucose by means of isomerization, as described above, it separated the glucose molecules from the fructose molecules. It then recycled the glucose thus recovered by re-isomerization. It thereby obtained isoglucose in which the proportion of fructose was greater than that of glucose. That process of separation followed by isomerization is then repeated several times, yielding isoglucose with a very high fructose content.
5 With effect from 1 October 1985 that manufacturing process was modified. Roquette started making isoglucose with a high fructose content by means of successive isomerizations but using, instead of recycled glucose, a mixture comprising glucose and at least 10% fructose.
6 The sweetening power of isoglucose with a high fructose content which Roquette produces by either of those methods is almost double that of sugar.
7 By notice of recovery of 16 September 1987, the Direction Générale des Impôts required Roquette to pay the sum of FF 397 528 by way of levy on the production of isoglucose imposed by various regulations adopted as part of the common organization of the markets in the sugar sector. According to the Direction Générale des Impôts, Roquette produced, between 1 July 1985 and 30 September 1986, more isoglucose than it had declared. It takes the view that those levies apply not only to the final production of isoglucose with a high fructose content but also to the intermediate yields of isoglucose which were required for its manufacture. It further states that those levies must also be applied to isoglucose which is not sold as such but is used in the manufacture of other products marketed by Roquette, such as levulose and mannitol.
8 Roquette, which contests that calculation method, lodged a complaint against the decision of the Direction Générale des Impôts, which was dismissed. It then instituted proceedings before the Tribunal de Grande Instance, Paris, for the annulment of the decision dismissing its complaint and of the notice of recovery and for an order cancelling the taxation required of it and awarding compensation for belated payment.
9 The Tribunal de Grande Instance, Paris, stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling: "1. To what extent is the application of Regulation (EEC) No 1761/77, as amended by Regulation (EEC) No 3609/84, concerning the calculation of the refund to be recovered from isoglucose manufacturers linked to the application of Article 2 of Regulation (EEC) No 1443/82, as amended by Regulation (EEC) No 434/84, fixing the method of recording isoglucose production? 2. Does a glucose syrup which contains 10% by weight of fructose in the dry state after one isomerization and is isomerized subsequently one or more times come within the scope, in respect of each isomerization, of Regulation (EEC) No 434/84, that is to say, does production of isoglucose to be attributed to the quotas provided for under Regulation (EEC) No 1785/81 occur at each isomerization? 3. Does the production of isoglucose as an intermediate product, that is to say as a product which is used to produce another product for sale and disappears in the production process, come within the isoglucose quota system as defined in Article 24 of Regulation (EEC) No 1785/81?"
10 Reference is made to the Report for the Hearing for a fuller account of the legal framework, the facts, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. The question concerning the link between the regulations adopted in the cereals sector and those adopted in the sugar sector, as regards the method for determining isoglucose production
11 By its first question, the national court essentially asks whether isoglucose production must be recorded using the same calculation method both in order to establish the amount of the production refunds which isoglucose manufacturers must repay under the rules on the common organization of the markets in the cereals sector and in order to ensure compliance with quotas and determine the levies to be paid under the rules of the common organization of the markets in the sugar sector.
12 This question must be considered in relation to the position of Roquette, which takes the view that isoglucose production must necessarily be determined in the same way in both sectors, since if intermediate production of isoglucose were brought into account, as contended for by the Direction Générale des Impôts, manufacturers would be penalized under the rules on the common organization of the markets in cereals.
13 Before this question is answered, it must be decided whether the recording of isoglucose production meets the same requirements for the purposes of the common organization of the markets both in the cereals sector and in the sugar sector.
14 It must be noted first of all that Article 11 of Regulation No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (Official Journal 1975 L 281, p. 1) provides for the grant of production refunds in particular "for maize and common wheat used in the Community for the manufacture of starch" and "for maize groats and meal used in the Community for the manufacture of glucose by direct hydrolysis". Pursuant to Regulation No 2742/75 of the Council of 29 October 1975 on production refunds in the cereals and rice sectors (Official Journal 1975 L 281, p. 57) those refunds are paid in the form of advances before any processing of the cereals. However, by Regulation (EEC) No 1665/77 of 20 July 1977 amending Regulation No 2742/75 on production refunds in the cereals and rice sectors (Official Journal 1977 L 186, p. 15), the Council abolished those refunds as regards products destined for the manufacture of isoglucose. By the abovementioned Regulation No 1761/77, the Commission laid down detailed rules for the recovery by Member States from isoglucose manufacturers of production refunds advanced to them. Pursuant to Article 3 of that regulation, as amended by Regulation No 3609/84, the amounts to be recovered are determined by multiplying the quantity of isoglucose produced first by a coefficient representing the quantity of cereals needed for the manufacture of a tonne of isoglucose and then by the rate of refund applicable to those cereals.
15 It follows that, under Regulation No 1761/77, as amended by Regulation No 3609/84, the quantity of isoglucose produced is only one factor which, by application of a flat-rate coefficient which is different for each of the basic cereal products employed, makes it possible to determine the quantity of cereals converted into starch and then into glucose and thus to establish the amount of the refund advanced.
16 It must be borne in mind that the subsequent isomerizations carried out by undertakings such as Roquette are not of glucose extracted from starch but of glucose obtained from isoglucose produced at an earlier stage. If the quantities of isoglucose taken into account in calculating the amount of the production refunds to be recovered included not only the quantities of isoglucose produced from glucose extracted from starch but also those produced from glucose obtained from isoglucose produced at an earlier stage, the quantity of isoglucose initially employed would be over-estimated, as would the quantities of starch and cereals initially processed. Such inclusion would result in manufacturers' being required to repay refunds larger than those advanced to them. It follows that, in the case of successive isomerizations, that calculation must take account only of the quantity of isoglucose obtained from the first isomerization, that is to say the quantity of isoglucose obtained direct from the glucose extracted from starch.
17 It is therefore necessary to decide whether that method may also be applied under the common organization of the markets in the sugar sector.
18 Under the common organization of the markets in sugar, production of isoglucose, like that of sugar, is subject to a quota system which was introduced by Article 24 of Regulation No 1785/81. That system includes rules on levies intended to fund the disposal of surplus sweeteners. In order to facilitate the harmonious and effective application of that system, a method of recording the production both of sucrose syrups and of isoglucose was introduced by Regulation No 1443/82. Pursuant to Article 2(2) of that regulation, as amended by Regulation No 434/84, the production of isoglucose is to be recorded by: "(a) physical metering of the tel quel volume of the product, and (b) determination of the dry matter content by refractometry, as soon as the isomerization process has terminated and before any operation to separate the glucose and fructose constituents or to produce mixtures."
19 That article thus requires account to be taken, for the purposes of an undertaking' s quotas, of the quantities of isoglucose recorded following each isomerization and before any separation or mixing of the constituents of isoglucose with other products. It thus means that account is to be taken of all the quantities of isoglucose produced, including those which, in the manufacture of isoglucose with a high fructose content, are produced at an earlier stage, in particular from recycled glucose.
20 That interpretation also necessarily follows from the very objectives of the rules adopted for the common organization of the markets in the sugar sector.
21 As the Court held in its judgments in Case 138/79 Roquette Frères v Council [1980] ECR 3333 and Case 108/81 Amylum v Council [1982] ECR 3107, the rules on quotas were adopted, as part of the common agricultural policy, having regard to the similarity and interdependence of the sugar and isoglucose markets. It is apparent from the second recital in the preamble to Regulation No 1785/81 that isoglucose is a direct substitute for liquid sugar obtained from sugar beet or sugar cane.
22 It must be emphasized, however, that such substitution can operate, by virtue of the equal treatment which the quota system seeks to ensure, only to the extent to which those two products possess similar properties.
23 That is the case as regards liquid sugar and isoglucose obtained from the first isomerization of glucose. As stated earlier, those products have the same physical and chemical characteristics and, in particular, the same sweetening power.
24 On the other hand, as also stated above, isoglucose with a high fructose content has, after recycling, a fructose content, and therefore a sweetening power, almost double that of sugar.
25 Accordingly, if only the final production of isoglucose with a high fructose content were set against quotas, the manufacturers of such isoglucose would obtain, quantity for quantity, a product with greater sweetening power. However, since the production of isoglucose contributes to greater sugar surpluses, as the Court recognized in its abovementioned judgments in Roquette and Amylum, further surpluses would thereby be created in the sugar sector, the disposal of which would not be funded by any contribution from isoglucose manufacturers. That calculation method would thus distort competition between their product and sugar. Similarly, competition between isoglucose manufacturers would be affected, depending on whether or not they had recourse to recycling.
26 It follows that, for the purposes of Article 2(2) of Regulation No 1443/82, as amended by Regulation No 434/84, isoglucose production must be recorded after each isomerization and before any further processing of the product.
27 It follows from the foregoing that the determination of isoglucose production pursues different objectives under the common organization of the markets in cereals and under the common organization of the markets in sugar. It is not therefore necessary to take account of that production in the same way in the two sectors.
28 It must therefore be stated in reply to the national court that the method of calculating isoglucose production for the purposes of determining the production refunds to be repaid by isoglucose producers pursuant to Commission Regulation (EEC) No 1761/77 of 29 July 1977 laying down rules for the application of Regulation (EEC) No 2742/75, as amended by Commission Regulation (EEC) No 3609/84 of 20 December 1984, does not have to be the same as the method of calculating isoglucose production for the purposes of ensuring observance of the quotas and determining the levies payable pursuant to Commission Regulation (EEC) No 1443/82 of 8 June 1982 laying down detailed rules for the application of the quota system in the sugar sector, as amended by Commission Regulation (EEC) No 434/84 of 9 February 1984. The question concerning the calculation of isoglucose production to be set against quotas in the case of successive isomerizations
29 By its second question, the national court essentially asks whether the quota system also applies to intermediate isomerizations of isoglucose such as those employed by Roquette in order to obtain isoglucose with greater sweetening power.
30 This question relates to the manufacturing process introduced by Roquette on 1 October 1985. Roquette considers that a mixture of glucose and 10% fructose constitutes isoglucose within the meaning of Article 2 of Regulation No 1443/82, as amended by Regulation No 434/84. Since that isoglucose was already taken into account when it was produced, Roquette considers that it should be deducted from the basis of assessment to levy so as to avoid a double charge.
31 It should be borne in mind that Article 2(1) of Regulation No 1443/82, as amended by Regulation No 434/84, provides: "For the purposes of Articles 26 to 29 of Regulation (EEC) No 1785/81 'isoglucose production' means the quantity of the product obtained from glucose or its polymers having a content by weight in the dry state of at least 10% fructose, irrespective of its fructose content in excess of that limit, expressed as dry matter and recorded in accordance with paragraph 2."
32 It is immediately apparent that that definition does not require the isoglucose to be produced from pure glucose. It therefore extends to isoglucose produced from glucose mixed with other substances, including therefore fructose.
33 Moreover, that is the only interpretation that is in conformity with the rules on quotas adopted under the common organization of the markets in the sugar sector. The isomerization of a mixture of glucose and fructose yields an isoglucose with a high fructose content in the same way as the isomerization of recycled glucose. If a manufacturer of isoglucose with a high fructose content were permitted to deduct from the quantities marketed by him the quantities of intermediate isoglucose manufactured by him, only isoglucose with a very great sweetening power would be set against his quota, thus destroying the balance sought by the Community legislature as between the various manufacturers of sweeteners.
34 It must therefore be stated in reply to the second question that Article 2(1) of Commission Regulation No 1443/82 of 8 June 1982, as amended by Commission Regulation No 434/84, is to be interpreted as meaning that at each successive isomerization of glucose syrup with a content by weight in the dry state of at least 10% fructose after the first isomerization there is a production of isoglucose subject to the quota system laid down by Council Regulation No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector, if the effect of the successive isomerizations is to increase the fructose content of the final product. The question concerning the application of the quota system to isoglucose used as an intermediate product for the manufacture of other products
35 By its third question, the national court seeks to establish whether isoglucose used as a intermediate product for the manufacture of other products such as levulose or mannitol is to be set against the quotas provided for by Regulation No 1785/81.
36 It need merely be recalled that that regulation makes sugar subject to the quota system, without any distinction being drawn according to whether it is used as an intermediate product or as a final product. In view of the fact that sugar and isoglucose are subject to the same rules, no such distinction may be drawn with respect to isoglucose.
37 Moreover, as the Commission rightly emphasizes, since Article 31 of Regulation No 1785/81 reserves to the Council, on completion of a specific procedure, the right to disapply the quota system to isoglucose used for the manufacture of certain products, any isoglucose which is not covered by Council rules to that effect is subject to the quota system even if it is intended for use in the manufacture of another substance.
38 It must therefore be stated in reply to the national court that Article 24 of Council Regulation No 1785/81 of 30 June 1981 is to be interpreted as meaning that isoglucose quotas apply also to isoglucose used as an intermediate product, that is to say, a product which is used in the manufacture of another product destined for sale and which disappears in the manufacturing process.