C-51/65

JUDGMENT OF THE COURT 28 APRIL 19661

ELFO - Industria Laminati Ferrosi Odolese SpA v High Authority of the ECSC2

Case 51/65

Summary

Procedure — Measures of inquiry — Application for adoption of such measures — Con­ ditions of admissibility (Rules of Procedure, Article 45)

An application for the adoption of measures ed if that party offers no evidence whatever of inquiry made by a party cannot be accept-to justify such measures.

Application for the annulment of two individual decisions dated 19 May 1965 addressed to the applicant and fixing respectively the quantity of scrap assessable and the amount of the equalization contribution payable;

1 — Language of the Case: Italian. 2 — CMLR.

JUDGMENT OF 28. 4. 1966 — CASE 51/65

THE COURT

composed of: Ch. L. Hammes, President, L. Delvaux, President of Chamber, A. M. Donner, R. Lecourt and R. Monaco (Rapporteur), Judges,

Advocate-General: J. Gand

I — Facts '(a) Exercise the powers conferred on it by Article 33 of the Treaty in order to annul The facts may be summarized as follows: the two individual decisions of 19 May By letter of 8 April 1963, the High Authority 1965 and, in addition, in so far as it informed the ILFO company that the deems it appropriate, Decision No 7/63 amount of assessable ferrous scrap con­ to which the individual decisions refer; sumed by the undertaking had been esti­ (b) Exercise the powers conferred on it by mated at 29 958 metric tons and called upon Article 34 of the Treaty to refer the it to pay the sum of 196197166 lire by way matter back to the High Authority for of equalization. it to take the necessary steps to comply The applicant challenged this letter and with the judgment, including the re- basic Decision No 7/63 before the Court of imbursement of any sum paid in error Justice. The Application in Case 61/63 was and the payment of such damages as the dismissed by the Court as inadmissible by Court shall see fit; Judgment of 9 June 1964. (c) Order the High Authority to pay the In the light of the observations of the appli­ costs; cant and the documents produced by it in (d) Make interlocutory orders for the con­ the course of the proceedings, the High duct of the measures of inquiry indica­ Authority made a further review of the ted in each submission.' quantities of scrap assessable. As a result of The defendant contends that the Court these checks and by applying the indirect should: method of calculation based upon the con­ ‘Take into account the fact that the metric sumption of electricity, it adopted, on 19 tonnage of assessable scrap has been re­ May 1965, two individual decisions one of duced to 24 979 metric tons and the total of which estimates the quantity of assessable the sums owed by the ILFO company to scrap at 26 532 metric tons, whilst the other 171765 956 lire, dismiss the application fixes the amount of the corresponding con­ against the two individual decisions of 19 tribution at 176 080 828 lire. May 1965 and order the applicant to pay the These two decisions, which were notified to costs.’ the ILFO company on 24 June 1965, form the subject of the present application. III — Submissions and arguments of the parties II — Conclusions of the parties The submissions and arguments of the The applicant claims that the Court should: parties may be summarized as follows:

the admissibility of the application. The defendant makes the general observa tion that the applicant is relying on a general The substance of the case and undetermined concept of misuse of powers which is not the one which is sanc 1. Misuse of powers in the form of in tioned by Community law. Both Article 33 equality of treatment; infringement of of the Treaty and the case-law of the Court the general rule against discrimination have distinguished between this submission (Article 3(a), together with Articles 53 and those other cases in which an applica (4)(b), etc. of the Treaty) tion has been brought against an ultra vires act and considered that it can only be The applicant observes that when the ad brought if the purpose of the High Author ministration applies different criteria or ity's action was different from that fixed by methods to similar situations, without the the law. resulting difference in treatment being justi It is, moreover, mistaken to conclude that fied, its assessment of that situation is not the High Authority has misused its powers made in the normal logical manner. Thus, from the fact that the treatment of the appli not only does the administration misuse its cant was different from that of other under powers, but it also infringes the general takings. Although it is true that unequal principle of law which prohibits all dis treatment may sometimes result from a crimination. misuse of powers, it is also true that such In this instance the High Authority has treatment does not itself necessarily imply misused its powers and infringed this prin the existence of such misuse. ciple by adopting, as regards the applicant, In fact, even supposing the High Authority the method of calculation based on the con to have treated ILFO differently from the sumption of electricity in the furnaces. First, other undertakings, it remains to be estab this method could not be used as regards lished that it did so for a purpose other than undertakings which did not operate electric that fixed by the law, which is to assess the furnaces during the period in question. applicant to contribution on the same foot Secondly, it is known in iron and steel circles ing as all consumers of ferrous scrap.

The fact that it makes it impossible for the administration was not applied to the applicant, although to enforce the law normally cannot then it was applied to other undertakings, con criticize the measures which it has had to stitutes discriminatory treatment of the adopt in order to achieve its object (cf. former. Judgments in Cases 18/62 and 108/63). In order to show that adoption of the crite In this instance, the duty of the High rion based on the actual number of working Authority to act impartially by requiring the days during the period under consideration same contribution from all undertakings would have produced figures which were which have consumed the same quantities both considerably lower than those quoted of ferrous scrap could only be respected if by the High Authority and very close to certain essential data were made available to those declared by the ILFO company, the the High Authority following requests that applicant suggests that particular measures it be provided by the undertakings concern-

ed. However, although in this case the High treatment may be 'the result of a misuse of Authority took all possible steps, the ILFO powers', it is sufficient to establish the company refused to cooperate to such an existence of such inequality for the misuse extent that a pecuniary sanction was im of powers to be also established and for the posed. It was thus impossible for the High contested decision to be shown as unlawful. Authority to carry out a direct assessment As regards the existence of this inequality, it of the consumption of ferrous scrap. must be stated first of all that, in view of its Furthermore, to claim that an assessment inability to provide complete and accurate must be based on the same criteria of cal documents, the applicant never claimed that culation for all undertakings, however they the High Authority should apply to it 'the are organized and whatever their activities, same method of assessment' as that applied or whatever their conduct vis-à-vis the High to those undertakings which were able to Authority, is to claim an unequal treatment supply such documentation and that it in law. should not use any inductive method of cal In addition, it must be noted on a more culation. It merely puts forward the objec technical level that the method of calcula tion that, in this instance, the High Author tion in dispute, based on the consumption ity employed an inductive method which of electricity, produced much more reliable does not always give consistent results and results than those produced by the method which was in fact not applied to other under based on average daily consumption, cal takings by reason of the unreliable nature, culated on the basis of the number of work acknowledged by the High Authority, of the

and specific documents. tion which in this instance must be deter On a technical level the applicant then dis mined inductively. putes the criticisms made by the defendant The applicant replies that a misuse of powers of the method of calculation based on the does not necessarily always presuppose an number of working days. Although the intention on the part of the administrative method based on the consumption of elec authority to employ the power with which it tricity was at one time approved by experts, is entrusted for an illegal purpose. Intention experience has shown it to be far from is not a necessary requirement of such a perfect, by reason of the different situations defect, which may also arise from the fact of undertakings operating electric furnaces. that, by a distortion of the facts or discrimi This method has in fact been challenged on nation, the administration has pursued an several occasions and, in certain cases, it object which is 'abnormal' as compared was abandoned by the High Authority in with that laid down by law. favour of the method based on 'average It can be supposed that in this instance the daily consumption' which, depending on High Authority, motivated by the need to the number of working days, is based on a ensure a balance between the debit and certain and undeniable factor: the calendar. credit accounts of the equalization scheme, The argument that the total consumption was led to choose, from the various induc must be known before it is possible to cal tive methods of calculation, not that which culate the ‘average’ daily consumption arises would give the most precise results but that from a misunderstanding.

ILFO v HIGH AUTHORITY

More this instance, 289 days. over, it is an established legal principle that, — This number of days, divided by 12, cor even if the administration has in fact pur responds to the number of working days sued other aims, there can be no misuse of per month: that is, 24 days. powers if it has acted in pursuance of the — As, when the ILFO company is working basic object determined by the law for the at full capacity, it operates three shifts of exercise of such powers. In this instance, it 8 hours each (for a total of 24 hours) per is clear that, in all its actions concerning the day, the theoretical work rate per month, applicant, the High Authority pursued the measured in hours is 24 days of 24 hours; essential object of its powers, which is the that is, 576 hours. determination of the basis of assessment to — The work rate thus established is only contribution and that, in doing so, it tried

steel produced. By multiplying these methods of calculation in cases where this figures by the total number of chargings enabled the basic rate of contribution to be it is possible to establish the total quan estimated more accurately; the method tity of scrap charged and liquid steel based on the consumption of electricity produced during the four years' period: constitutes the extrema ratio to be applied that is, 22 907 metric tons of scrap (with in cases such as the present in which the

undertaking totally fails to cooperate. 1 200 kw per metric ton. Similarly, the Moreover, the applicant criticizes more criterion of 1 000 kw per metric ton severely the criteria—such as the coefficient adopted by the High Authority for the of 900 kw per metric ton—adopted by the commissioning period, does not repre experts of the High Authority in the appli sent the common experience. The most cation of this method than the distortion of credible criterion in this case is 1 400 kw certain facts, with the result that its request per metric ton. for an expert assessment runs counter to the — The contested decision does not take case-law of the Court which has acknowl into account the use of 'ferro-alloys' in edged these criteria. the production of liquid steel, which is Furthermore, the method of calculation put at 2%. based on average daily consumption is in- — The contested decision allows for re- capable of producing credible results. First, coveries of scrap to the extent of 6%. the applicant itself acknowledges by im Taking into account the fact that ILFO plication that this method is beset by un produced small ingots of 50 kg, which certainties, since it admits that, in practice, implies considerable losses, this rate many interruptions may occur in the theore ought to be raised to 8 % which is, more

2. Misuse of powers arising from the distor metric tons as justified whereas it should tion of the facts; infringement of the also have taken into account documents general principle of law which requires concerning purchases of other quantities the grounds given for a decision to be which were subsequently accepted as in accurate order by the tax authorities. — The High Authority fixed the arisings Referring in particular to the decision fixing from this material for re-use at 25%. the metric tonnage of assessable scrap con This percentage is lower than that which sumed by ILFO, the applicant makes the is suggested by the common experience, following observations: which is approximately 35% for un — It is incorrect to state that the under prepared material from the domestic taking 'merely declared' purchases of market. ferrous scrap of 947 metric tons for the — the rate of 7 % fixed by the High period under consideration, since it Authority for arisings from rolling is stated at the time its total consumption also not plausible. Arisings from rolling to be 7 230 metric tons of ferrous scrap at the Terni company, for example, were from the beginning of its operations at a rate of 14%. At all events, the cal until the end of the equalization scheme. culation takes into account only 8 153 The figure of 947 metric tons thus refers metric tons of material for re-use and to the quantities of bought scrap subject ready for rolling and thus ignores the to equalization. The difference between fact that the ILFO company had de these metric tonnages represents re- clared its production of rolled steel to be covered scrap. 26 040 metric tons and that the rolling — The criterion of 900 kw per metric ton is of ingots whether purchased or of own not plausible for a furnace of 4 to 5 manufacture gives rise to an identical metric tons' capacity.

ILFO v HIGH. AUTHORITY

ity. Article 38 of the Rules of Procedure, accord The same distortion of facts has also been ing to which the applicant must provide 'an alleged in relation to the consequences of the indication of any evidence'. That the ILFO High Authority's application of the induc company has in fact acted in accordance tive method. This complaint is inadmissible, with such a provision is shown by its first, because it is not based on facts actually indication of evidence and requests for misrepresented, but on facts which it is verification made on each contested point. claimed are to be regarded as misrepresent In particular, as regards the material for ed on the basis of a presumption (irregular re-use, to the debit notes produced earlier ity or lack of credibility of the inductive for the purchase of 17 716 metric tons and method) which rests itself on arguments accepted by the tax authorities must now which the applicant admits to be unproved be added further notes which were held by to the extent that it refers in their support to these authorities for a long period and documents 'to be produced', figures 'to be which evidence the purchase of 4188.329 checked', investigations 'to be carried out' metric tons of material for re-use.

These once the regularity of the method of cal figures are almost the same as those pre culation adopted by the High Authority is pared every month by the foundry manager. acknowledged, no inquiry can be held into Had the defendant used the inductive its consequences (for example, the applica method of calculation based on the number tion of the criterion of 900 kwh per metric of working days, it would have seen that the

quantities declared are very close to those to equalization was thus reduced from produced by applying this method. 26 532 to 24 979 metric tons and the The defendant replies that the applicant's amount of contribution owed by ILFO declarations have always been incomplete 176 080 828 lire to 171 765 956 lire. and unclear. Moreover, the applicant per­ In the opinion of the High Authority, the sists in providing the evidence necessary to fact that the two contested decisions have justify its claim only in a piecemeal fashion, been amended in this way need not neces­ only deciding at the last minute on the pro­ sarily lead to their annulment, as the amend­ duction of certain essential documents and ment was not the result of an error on the in some cases after the expiry of the reason­ part of the High Authority, but arose from able period provided for in Article 42 of the the delay with which the applicant provided Rules of Procedure. This applies in partic­ the necessary information. ular to the documents concerning the material for re-use. The notes produced 3. Misuse of powers in the form of a failure to give reasons for Decision No 7/63 and earlier referring to 4 333 metric tons were the inconsistencies therein not accepted by the High Authority, since they had been prepared by the ILFO com­ As set out in the application this submission pany and did not mention the supplier. The presupposed that the estimate of the quan­ applicant then produced two notes which tities of scrap consumed and the calculation had been accepted by the tax authorities and of the debt notified to ILFO could have been which it considered to be evidence of the regarded as final, although Decision No purchase of this scrap. These invoices, how­ 7/63 on which these two measures were ever, show a price which does not corre­ based only allowed a provisional calcula­ spond to the declared value of the scrap in tion to be made of the contributions owed question. by each undertaking. As the High Authority As regards the probable percentage of re­ specified in the statement of defence that coveries of scrap, the High Authority cannot this estimate and calculation were provisio­ accept the figure of 9% indicated in the nal, the applicant withdrew this submission publication of the Terni company, as the in the reply. conditions of production of this under­ taking cannot be compared with those of the IV — Procedure ILFO company. Similarly, as regards the arisings from rolling, in the light of the type The written procedure followed the normal of production of this undertaking the per­ course.

The substance of the case

The amendment of the contested decisions

The two individual decisions of 19 May 1965, contested in the present application, fixed the basis of assessment to contribution in the case of the applicant company at 26 582 metric tons for the accounting periods from 1 April 1954 to 30 November 1958 and the amount owed by the applicant to the financial scheme for equalization at 176 080 828 lire. In the light of the invoices annexed to the reply concerning the purchase of 4188.329 metric tons of materials for re-use, the High Authority partially amended the operative part of these decisions by reducing the amount of assessable scrap to 24 977 metric tons and the sum payable by way of equalization to 171 756 956 lire.

These amendments are not the result of the adoption of new methods of calcula­ tions as distinct from those used in the contested decisions, but rather are the result solely of the belated production of fresh documents which led the High Authority to reconsider certain factors in the basis of assessment to contribution. As, there­ fore, the essential questions of fact and law on which the contested decisions are based have not been amended as a result of this correction in the calculations, these decisions remain valid and a ruling must be given on the other claims made by the applicant.

The first submission

The applicant maintains that the High Authority misused its powers and violated the general principle prohibiting discrimination by applying to the applicant a method of assessment based on the consumption of electricity, although it had applied to other undertakings, in particular to those not possessing electric furnaces a method based on the average consumption of ferrous scrap per working day. The applicant complains that the High Authority did not choose from among the various inductive methods of calculation the one capable of giving the most accurate results but that which yielded the most favourable results from the point of view of balancing the accounts of the Equalization Fund.

Moreover, with reference to the complaint of discrimination, the applicant has put forward no evidence to show in what way, as regards the application of the method of calculation based on average scrap consumption per working day, its position was comparable to that of the undertakings which benefited from the application of this method.

The complaints of misuse of powers and violation of the principle of non-dis­ crimination must, therefore, be dismissed as unfounded.

The second submission

For all these reasons, therefore, this submission must be dismissed.

The claim for damages

The applicant claims that the High Authority should be ordered to pay such damages as the Court shall see fit.

The applicant has not brought any evidence as to the existence or the amount of the damage alleged.

These submissions must therefore be dismissed.

Costs

hereby:

1. Dismisses Application 51/65 as unfounded;

2. Orders the parties to bear their own costs.

Hammes Delvaux

Donner Lecourt Monaco

Delivered in open court in Luxembourg on 28 April 1966.

Mr President, per metric ton of steel produced was in­ Members of the Court, creased from 900 kWh to 1000 kWh. It also accepts a deduction of 6% in respect of Since 1955 ILFO, Industria Laminati Fer­ ferrous scrap recovered from material for rosi Odolese, a company whose registered re-rolling, the purchase of which is proved. office is at Odolo (Brescia), has been pro­ Another decision of the same date fixed the ducing by means of two electric furnaces debt owed by the undertaking at 176 080 828 pig-iron and ordinary steels, more specifical­ lire. ly semi-finished products for re-rolling and These two decisions are the subject of tube rounds for reinforcing concrete. It was Application 51/65. However, in its rejoin­ unable to produce the documents requested der, taking into account the invoices during checks carried out in July 1958 and attached to the reply concerning 4189 metric October 1960, in particular a detailed tons of material for re-use, the High Author­ schedule of the movements of ferrous scrap ity accepts a further deduction of 1 533 and the entry books or other records of metric tons of ferrous scrap which is not ferrous scrap deliveries. The High Author­ assessable. It requests you to take note of ity had therefore to make its own estimate the fact that the assessable tonnage has thus of assessment of the undertaking's con­ been reduced to 24 979 metric tons and the sumption of bought scrap on the basis of the contribution debt of the undertaking to electricity consumed in operating the fur­ 171 765 956 lire and to dismiss ILFO's nace, that is, 29 527 810 kWh. To this first application in all other respects. assessment, notified to it on 8 January 1963, The content—if not the object—of the con­ the company made several objections which tested decision has thus been altered, al­ were subsequently met in part. though the competent authority has in no It was in these circumstances that the way revoked them. Such a revocation, decision of 19 May 1965 reduced to 26 532 followed by new decisions which would metric tons the quantity of ferrous scrap on have been the subject of a new application, which ILFO was liable to pay contributions. would undoubtedly have been in law a more The High Authority does in fact accept a correct procedure, but it would only have commissioning period of three months, resulted in delaying a settlement of the during which the consumption of electricity dispute. I consider, therefore, that it is