C-2/62
ECLI:EU:C:1962:45
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JUDGMENT OF 14.12.1962 — JOINED CASES 2 AND 3/62
application, may be regarded as a discriminatory or protective results
duty imposed unilaterally either at as customs duties. the time of importation or sub
if imposed 5. Although the first paragraph of sequently, and which, upon a product imported Article 95 by implication allows specifically 'taxation'
from a Member State to the exclusion on an imported product,
of a domestic product, has, similar it is only to the limited extent to
its which the same taxation is imposed by altering price, the same effect equally upon similar domestic pro on the free movement of products as a
customs duty. ducts. The field of application of this
This far from Article cannot be extended to the concept, being an
point of bet exception to the general rule pro allowing compensation is ween a tax burden created for the hibiting customs duties, on the of imposition an im purpose upon contrary necessarily complementary to it and enables it to be made ported product and a tax burden of a
effective. different nature, for example econo
The mic, imposed on a similar domestic concept of a charge having product. equivalent effect, invariably linked to that of'customs duties', is evidence of a general intention to prohibit not 6. To resolve the difficulties which
only measures which obviously take might arise in a given economic
the form of the classic customs duty sector, the Member States wished
but also all those which, presented Community procedures to be estab
under other names or introduced by lished in order to prevent unilateral
the indirect means of other pro intervention by national admini
cedures, would lead to the same strations.
In Cases 2 and 3/62
COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY , represented by Hubert Ehring, Legal Adviser of the European Executives, acting as Agent, with an address for service in Luxembourg at the Chambers of Henri
Manzanarès, Secretary of the Legal Service of the European Executives, 2 Place de Metz,
applicant,
v
1. GRAND DUCHY OF LUXEMBOURG (Case 2/62) represented by Jean Rettel, Legal Adviser attached to the Ministry of Foreign Affairs,
acting as Agent, with an address for service in Luxembourg at the
Ministry of Foreign Affairs, 5 rue Notre-Dame,
and
2. KINGDOM OF BELGIUM (Case 3/62) represented by its Deputy Prime
Minister and Minister of Foreign Affairs, having appointed as its Agent
COMMISSION v LUXEMBOURG & KINGDOM OF BELGIUM
Jacques Karelle, Director of the Ministry of Foreign Affairs and Foreign
Trade, assisted by Marcel Verschelden, Advocate of the Cour d'Appel of Brussels, with an address for service in Luxembourg at the Belgian
Embassy, 9 Boulevard du Prince-Henri,
defendants,
Application for a ruling on the legality of:
—
Increases in the special duty levied by Belgium and Luxembourg on the
issue of import licences for ginerb ad; and
— The extension of that duty to products similar to gingerbread under Heading No 19.08 of the Common Customs Tariff;
which is contested on the ground that they were introduced after 1 January
1958;
THE COURT
composed of: A. M.Donner, President, L. Delvaux and R. Rossi (Presidents
ofChambers), O. Riese, Ch. L. Hammes, A. Trabucchi and R. Lecourt
(Rapporteur), Judges,
Advocate-General K. Roemer
Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure After the entry into force of the Treaty on 1 January 1958, the amount of this In Belgium and Luxembourg, by Decrees duty, which was originally fixed at 35 of 16 August 1957 and 20 August francs per 100 kg., was progressively 1957 respectively, a special import duty increased to 137 francs in 1961 and was created which was to be levied thereafter reduced to 95 francs and then upon the issue of import licences for to 70 francs at the end of that year. gingerbread. Finally, by Decrees of 24 and 2 7 February
JUDGMENT OF 14.12.1962 — JOINED CASES 2 AND 3/62
1960 respectively, the special duty was actions before the Court under Article extended in both countries to products 169 of the Treaty, in which it sought
similar to declarations that Belgium and Luxem gingerbread coming under Heading No 19.08 of the Common bourg had failed to fulfil their obligations Customs Tariff. under the Treaty. The applications were The Commission complained to the lodged at the Court Registry on 21 Belgian and Luxembourg Governments February 1962. by letter of 19 May 1961 that they had By an Order dated 19 June 1962 the
failed to fulfil their obligations under Court joined the two cases on the ground Article 12 of the Treaty and, after that they related to the same subject
receiving their observations, sent them matter, since the Grand Duchy of
on 2 October 1961 a reasoned opinion Luxembourg had adopted the same
dated 27 September 1961 in which it conclusions and arguments as the King
stated that they had infringed the dom of Belgium.
Treaty and invited them to take the The procedure followed the normal
necessary measures to comply with the course.
Treaty within a period of one month. Following an application to the Court Having obtained an extension of this by the defendants which was lodged at period until the end of November, the the Court Registry on 10 November two Governments by letters of 27 Nov 1962, and thus made after the oral
ember and 4 December 1961, without procedure had closed, and which con
denying that 'a unilateral measure is of tained a request for the reopening of the
its very nature open to criticism', said procedure, the Court dismissed expressed the wish to obtain the authoriz the request by an Order dated 3 ation of Commission, under Article the December 1962. 226 of the Treaty, to levy on imports of gingerbread coming from Member States II — Conclusions of the parties a charge having equivalent effect to the special duty. By a letter dated 20 December 1961 the The Commission asks the Court 'to Commission declared that it was pre find that, by increasing the special pared to examine as a matter of urgency import duty levied on the issue of the particular situation with regard to import licences for gingerbread after
the products in question, on condition the Treaty entered into force, and by that the special duty, which had been extending the levy of this duty to increased or. put into effect after 1 products similar to gingerbread coming
January 1958, should be suspended until under Heading No 19.08 of the Common a decision had been given on the Customs Tariff, Luxembourg and
protective measures sought. Belgium have 'failed to fulfil their
The Governments concerned did not obligations under the Treaty'. agree to this proposal and, by letters It further asks the Court to order
dated 1 and 17 February 1962, they Belgium and Luxembourg to pay the
declared that they were relying upon a costs.
decision taken under Article 235 of the The defendants ask the Court to 'declare inadmissible'
Treaty, and confirmed on 4 April the application and to
1962 by the Council of Ministers of the 'state that there are no grounds for for Community, which provided the adjudicating upon it'. imposition of duties on the imports of They also ask the Court to 'declare the unfounded' certain goods arising from the processing application in any event to be
of agricultural products. and to 'dismiss it and order the applicant
The Commission then brought two to pay the costs'.
COMMISSION v LUXEMBOURG & KINGDOM OF BELGIUM
III —
Arguments of the parties only. In its view there is only one effect on the movement of goods which is On Admissibility common to all customs duties, namely the taxation of imported products alone,
The defendants have pleaded the in to the exclusion of domestic products. It
admissibility of the application made by suggests that the first paragraph of
the Commission on the ground that, Article 95 cannot be interpreted in any instead of following as it did the pro other way.
cedure laid down in Article 169, the Although the Commission does not
Commission to deal a was obliged as deny the legality of a special duty in matter of priority and urgency with their respect of rye, which is a raw material
request for authorization of protective for because rye making gingerbread, measures pursuantto Article 226 and with is covered by the agricultural pro
their request that the Regulation of the it visions of the Treaty, cannot equate Council of Ministers adopted pursuant which is a processed product gingerb ead,
to Article 235 should be applied, both from Annex II excluded to the Treaty, requests having been made in good time. with an agricultural product. The defendants state that in these The defendants plead that, to constitute circumstances the Commission is a charge having equivalent effect to a deprived of capacity and the legal the customs duty, the charge must have interest necessary for the purposes similar effects in all respects and not of taking action and that therefore its just in one specific aspect, whether cause of action has lost all legal effect. fiscal or protective. The applicant has answered this allega
tion by referring to the delay in making the requests mentioned above and the They stress the following points:
deficiency of the reasoning on which —
the essential effect of the special duty they were based, the impossibility of at issue is not to impose burdens on
rectifying the situation created by a foreign products but, through the refusal to comply with a reasoned opinion operation of an independent market
by means of a subsequent request for a ing policy, to align their prices on
derogation from that opinion, the absence those in the domestic market by means
of any connexion between the procedure of a kind of compensation; under Article 169 and that under —
the effect of the special duty is to
Article 226, and finally the Commission's enable the domestic market to be interest in obtaining a decision to settle organized, and this is not ilegal; the dispute on the interpretation of —
the duty on gingerbread varies in
Article 12. accordance with the duty on rye
the legality of which has not been On the substance of the case calledin question; —
the Council of Ministers has provided
The applicant states that a charge for the levy of a countervailing having equivalent effect to a customs charge on certain goods resulting duty within the meaning of Article 12 from the processing of agricultural
is a charge levied on imported products products.
Grounds of judgment
On admissibility
In claiming the application to be inadmissible, the defendants submit that
JUDGMENT OF 14.12.1962 — JOINED CASES 2 AND 3/62
the Commission has prevented the rectification of the situation under
consideration by improperly demanding the suspension of the measures criticized before deciding upon the requests for derogation put forward by
them both under Article 226 of the Treaty and under a Regulation adopted
by the Council of Ministers on 4 April 1962, pursuant to Article 235. By 'abusing its powers and by adopting an excessively legalistic attitude'
and by failing to decide as a matter of urgency upon the requests, as it was defendants' obliged to do, the Commission has in the submission, lost the
right to take proceedings against the defendants for infringement of the
Treaty.
As the Commission is obliged by Article 155 to ensure that the provisions of the Treaty are applied, it cannot be deprived of the right to exercise an essential power which it holds under Article 169 to ensure that the Treaty
is observed. If it were possible to prevent the application of Article 169
by a request for rectification, that Article would lose all its effect.
A request for derogation from the general rules of the Treaty —
in this case,
moreover, made at a very late date cannot have the effect of legalizing —
unilateral measures which conflict with those rules and cannot therefore
legalize retroactively the initial infringement.
The procedures for seeking a derogation used in the present case, the outcome
of which depended upon the view taken by the Commission, are entirely distinct both in their nature and effects from the warning procedure available to the Commission under Article 169: they cannot in any way frustrate the
latter procedure. There is no need to consider whether a possible abuse by
the Commission of its rights can deprive it of all the methods available to
it under Article 169, as it suffices to state that in this case no proof of such an abuse has been given or tendered.
It emerges from the oral procedure, moreover, that the defendants neglected to furnish the Commission with the necessary details to enable it to decide
upon their requests. What is more, any wrongful act or default on the part of the Commission —
which would have to be decided upon in an action
especially brought on this point would not in any way affect the — proceed
ings for infringement of the Treaty brought in respect of decisions which
still subsist at present and the legality of which the Court is bound to examine.
The applications must therefore be declared admissible.
COMMISSION v LUXEMBOURG & KINGDOM OF BELGIUM
On the substance of the case
The applications are brought for the purpose of obtaining a declaration of
illegality in respect of the increase of the special import duty on gingerbread imposed after the Treaty entered into force, and of the extension of that
duty to other similar products considered as a charge having equivalent
effect to a customs duty prohibited by Articles 9 and 12.
1. A charge having equivalent effect to a customs duty
According to the terms of Article 9, the Community is based on a customs union founded on the prohibition of customs duties and of 'all charges
having equivalent effect'. By Article 12 it is prohibited to introduce any
'new customs duties on imports .... or charges having equivalent effect' and to increase those already in force.
The position of these Articles towards the beginning of that Part of the Community'
Treaty dealing with the 'Foundations of the Article 9 being —
placed at the beginning of the Title relating to 'Free Movement of Goods',
and Article 12 at the beginning of the section with the 'Elimination dealing Duties' of Customs —
is sufficient to emphasize the essential nature of the
prohibitions which they impose.
The importance of these prohibitions is such that, in order to prevent their evasion by different customs or fiscal practices, the Treaty sought to forestall any possible breakdown in their application.
Thus it is specified (Article 17) that the prohibitions contained in Article 9 shall be applied even if the customs duties are fiscal in nature.
Article 95, which is to be found both in that Part of the Treaty dealing with Community' the 'Policy of the and in the Chapter relating to 'Tax Provisions', seeks to fill in any loop-hole which certain taxation procedures might find in the prescribed prohibitions.
This concern is taken so far as to forbid a State either to impose in any manner higher taxation on the products of other Member States than on its
own or to impose on the products of those States any internal taxation of such 'protection' a nature as to afford indirect to its domestic products.
JUDGMENT OF 14.12.1962 — JOINED CASES 2 AND 3/62
It follows, then, from the clarity, certainty and unrestricted scope of Articles 9 and 12, from the general scheme of their provisions and of the Treaty as a whole, that the prohibition of new customs duties, linked with the principles of the free movement of products, constitutes an essential rule and that in
consequence any exception, which moreover is to be narrowly interpreted, must be clearly stipulated.
The concept of 'a charge having equivalent effect' to a customs duty, far from being an exception to the general rule customs duties, is on prohibiting the contrary necessarily complementary to it and enables that prohibition to be made effective.
duties' This expression, invariably linked to that of'customs is evidence of a general intention to prohibit not only measures which obviously take the form of the classic customs duty but also all those which, presented under other names or introduced by the indirect means of other procedures, would lead to the same discriminatory or protective results as customs duties.
In order to see whether a charge has an equivalent effect to a customs duty, it is important to consider this effect in connexion with the objectives of the
Treaty, notably in that Part, Title and Chapter containing Articles 9 and 12, that is in relation to the free movement of goods, and still more generally the objectives of Article 3 which are aimed at preventing the distortion of
competition.
It is, therefore, of little importance to know whether all the effects of customs duties are present at the same time, or whether it is merely a question of one
only, or again whether side by side with these effects other principal or ancillary objectives were intended, since the charge jeopardizes the objectives of the Treaty and is the result not of a Community procedure but of a unilateral decision.
It follows from all these factors that a charge having equivalent effect within the meaning of Articles 9 and 12, whatever it is called and whatever its
mode of application, may be regarded as a duty imposed unilaterally either at the time of importation or subsequently, and which, if imposed specifically
upon a product imported from a Member State to the exclusion of a similar domestic product, has, by altering its price, the same effect upon the free movement of products as a customs duty.
2. Application to the present case
The duty on gingerbread, introduced in Belgium by Royal Decree of 16 August 1957 and in Luxembourg by Grand Ducal Decree of 20 August
COMMISSION v LUXEMBOURG & KINGDOM OF BELGIUM
1957, is described as 'a special import duty. . . . levied on the issue of import licences'. The legality of this duty, imposed after the signing of the Treaty but before it entered into force, cannot be disputed.
The same cannot be said, however, of the increases in that duty subsequent to 1 January 1958 or of the extension of the said duty, by the respective Decrees
of 24 and 27 February 1960 passed in the two countries, to products similar
to gingerbread, coming under Heading No 19.08 of the Common Customs Tariff.
Determined unilaterally after the Treaty entered into force, these increases in a 'special duty', levied at the time and on the occasion of the importation
of the products in question and imposed solely on these products by reason of their importation, raise a presumption of the existence of discrimination and protection contrary to the fundamental principle of the free movement of products which would be destroyed by the general application of such practices.
The defendants rebut this presumption—by asserting that the first paragraph of Article 95 of the Treaty permits the institution of such a duty if it constitutes
the counterpart of internal charges affecting domestic products to meet
the needs of an independent marketing policy. They regard the duty in dispute as the corollary of the supported price established for the benefit
of national producers of rye under the derogations contained in the
agricultural provisions of the Treaty.
However, the application of Article 95, with which Chapter 2 of Part Three Provisions' of the Treaty dealing with 'Tax begins, cannot be extended to every kind of charge. In the present case the duty in dispute does not appear, either by its form or by its clearly proclaimed economic purpose, to be a tax provision capable of coming within the scope of Article 95. Moreover, the field of application of this Article cannot be extended to the point of
allowing compensation between a tax burden created for the purpose of
imposition upon an imported product and a tax burden of a different nature, for example economic, imposed on a similar domestic product.
If such compensation were permitted, every State, by virtue of its sovereignty in its own domestic affairs, could in this manner compensate the widest
variety of tax burdens imposed on any product and this practice would
open an irreparable breach in the principles of the Treaty.
JUDGMENT OF 14.12.1962 — JOINED CASES 2 AND 3/62
'taxation' Although the first paragraph of Article 95 by implication allows
on an imported product, it is only to the limited extent to which the same taxation is imposed equally upon similar domestic products. Moreover, it must be stated that in the present case the duty in dispute has as its object
not the equalization of taxes imposing unequal burdens on domestic products and imported products but of the very prices of these products.
The defendants have in effect asserted that the charge in dispute was intended to 'equate the price of the foreign product with the price of the Belgian (Statement of Defence, They have even expressed doubt 19). product'
p.
whether it is 'compatible with the general scheme of the Treaty that within the Common Market the producers of one country may acquire raw materials State' at a cheaper price than the producers of another Member (Rejoinder, p. 29).
This argument ignores the principle according to which the activities of the
Community shall include the institution of a system ensuring that competi
tion in the Common Market is not distorted (Article 3 (f) ).
To accept the argument of the defendants would lead, therefore, to an
absurd situation which would be the exact opposite of that intended by the
Treaty.
It follows from Article 38 (2) that the derogations allowed in the case of
agriculture from the rules laid down for the establishment of the Common
Market constitute measures which are exceptional in nature and must be
narrowly interpreted.
They cannot, therefore, be extended otherwise than by making the exception the rule and therefore allowing a large proportion of processed products to
escape the application of the Treaty.
The list contained in Annex II must consequently be regarded as being restrictive, and this is confirmed by the second sentence of Article 38 (3). Gingerbread does not appear in the products enumerated in Annex II and has not been added to the list under the Community procedure laid down by Article 38 (3).
To resolve the difficulties which might arise in a given economic sector, the Member States wished Community procedures to be established in order to
prevent unilateral intervention by national administrations. In the present
COMMISSION v LUXEMBOURG & KINGDOM OF BELGIUM
case, however, the increases and extension of the duty in dispute were
determined unilaterally. It follows from all these factors that the presump
tion of discrimination and protection raised against the defendants has
not been rebutted. Moreover, until their request of 8 November 1962 for the reopening of the oral procedure they did not dispute that their
policy 'results indirectly in (oral behalf protection'
market arguments on
of Belgium, p. 21), this being, according to them, only a side-effect and not the essential effect of the duty in dispute.
The said application of 8 November 1962, which contradicts this assertion, recognizes however that the special duties in dispute 'certainly constitute a hindrance to the free movement of goods".
Finally, in its letter of 27 November 1961, the Belgian Government, which in its Rejoinder (p. 13) submits that the Commission 'was the cause of the perpetuation of the infringement which the defendant had shown that it
was prepared to terminate', did not deny that 'a unilateral measure is of its
very nature open to criticism'.
From all these considerations it must be concluded that the 'special import duty' on gingerbread, increased and extended in Belgium and Luxembourg after the Treaty entered into force, contains all the elements of a charge having equivalent effect to a customs duty referred to in Articles 9 and 12.
It must therefore be declared and adjudged that the decisions to increase or
extend this duty, taken after 1 January 1958, constituted infringements of the Treaty.
Costs
The defendants, having failed in all their submissions, must, by virtue of Article 69 (2) of the Rules of Procedure, be ordered to bear the costs.
On those grounds,
Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General;
Having regard to Articles 3, 9, 12, 17, 38, 95, 155, 169, 226 and 235 of the Treaty establishing the European Economic Community; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community;
OPINION OF MR ROEMER — JOINED CASES 2 AND 3/62
Having regard to the Rules of Procedure of the Court of Justice of the
European Communities, especially Article 69 (2);
THE COURT
hereby
1. Rules that Applications 2 and 3/62 brought by the Commission of the European Economic Community against the Grand
Duchy of Luxembourg and the Kingdom of Belgium are admissible and well founded;
2. Declares that the increases in the special duty determined by Luxembourg and Belgium on the issue of import licences for gingerbread, and the extension of that duty to products similar to gingerbread coming under Heading No 19.08 of the Common Customs Tariff, introduced after 1 January
1958, are contrary to the Treaty;
3. Orders the defendants to pay the costs.
Donner Delvaux Rossi Riese Hammes Trabucchi Lecourt
Delivered in open court in Luxembourg on 14 December 1962.
On behalf of the President A. Van Houtte L. Delvaux Registrar President of Chamber
OPINION OF MR ADVOCATE-GENERAL ROEMER <ap note>1</ap note> DELIVERED ON 30 OCTOBER 1962
Mr President, accordance with the Treaty, supervises Members of the Court, the application of its provisions in order to ensure the proper functioning The Commission of the European and development of the Common Market Economic Community which, in (Article 155), has instituted two actions,
1 — Translated from the German.