C-7/67

JUDGMENT OF THE COURT 4 APRIL 19681

Milchwerke H. Wöhrmann und Sohn KG y Hauptzollamt Bad Reichenhall (Reference for a preliminary ruling by the Finanzgericht, Munich)

Case 7/67

Summary

Agriculture — Common agricultural policy — Common organization of the markets — Milk and milk products — Importation from third countries — Charge by way of turnover tax — Not a charge having an effect equivalent to a customs duty — Legality (Regulation No 13/64/EEC of the Council of 5 February 1964, Article 12(2))

A tax imposed on the importation of prod­ organization of the markets in milk and ucts from third countries does not con­ milk products when it is imposed as a charge stitute a charge having an effect equivalent under the national system of turnover tax. to a customs duty within the meaning of Article 12(2) of Regulation No 13/64 on the Cf. paragraph 5, summary, Case 57/65, Rec. progressive establishment of a common 1966, p. 295.

THE COURT

composed of: R. Lecourt, President, A. M. Donner and W. Strauß (Rapporteur), Presidents of Chambers, A. Trabucchi and J. Mertens de Wilmars, Judges,

1 — Language of the Case: German.

JUDGMENT OF 4. 4. 1968 — CASE 7/67

Advocate-General: J. Gand

Registrar: A.Van Houtte

I — Facts 2. Contents of the order containing the reference; arguments of the Finanzgericht 1. Summary A — On 15 February 1967 the Finanzge­ A — Article 12(2) of Regulation No 13/64/­ richt, Munich, decided to request the Court EEC of the Council of 5 February 1964, on of Justice to give a preliminary ruling on the the progressive establishment of a common following questions: organization of the markets in milk and milk products (Official Journal of 27 Feb­ '(a) Is the character of a charge having an ruary 1964, p. 549 et seq.) (hereinafter effect equivalent to a customs duty referred to as 'Regulation No 13/64') pro­ within the meaning of Article 12(2) of vides that: Regulation No 13/64 determined by the general protective purposes of the 'On imports from third countries, the fol­ charge or else by the protective effect lowing shall be incompatible with the ap­ which it exerts in fact in the case of a plication of the present Regulation: given product? and in the second event: — the charging of any customs duty or charge having equivalent effect.' (b) Must it be considered that an equaliza­ tion tax constitutes in its totality a B — In June and July 1966 the undertaking charge having an effect equivalent to a Milchwerke H. Wöhrmann und Sohn KG customs duty when neither the supply (hereinafter referred to as 'the Wöhrmann of the (finished) domestic product undertaking') cleared through the relevant which is similar to the product im­ customs office five consignments of 'Roller' ported nor that of the primary product whole-milk powder of Austrian origin; the is directly subject to the turnover tax, German customs office levied on these or only as regards the fraction which imports a turnover equalization tax of 3 % exceeds the charge imposed upon sim­ in accordance with German law. ilar domestic products under the turn­ For this reason the Wöhrmann undertaking over tax? and if the Court replies in the commenced an action before the Finanz­ negative to the first part of question gericht, Munich; in this action it alleged in (b): particular that having regard to the fact that in accordance with the German law in (c) In a cumulative multi-stage turnover force milk and milk products are not sub­ tax system is it possible to equate the jected to the turnover tax, the turnover rate of the equalization tax charged equalization tax in question does not with that portion of the turnover tax amount to 'internal taxation' as referred to which relates to auxiliary and accessory in Article 95 et seq. of the Treaty establish­ materials, the means of production, ing the EEC, but to a charge having an fuel, energy, etc. used for the manufac­ effect equivalent to a customs duty which is ture of similar domestic products? and prohibited by Article 12(2) of Regulation if the Court replies in the affirmative to No 13/64. the second part of question (b):

(d) Where a charge is intended to be of an having an effect equivalent to a customs internal nature, does Article 12(2) [of duty, it must also be inquired which amongst Regulation No 13/64] produce, with the taxes affecting similar domestic prod regard to that portion of the charge ucts are those which must be considered as which has an effect equivalent to a 'indirect' within the meaning of Article 95 customs duty, direct effects and create of the Treaty and must therefore be taken individual rights which national courts into consideration in carrying out the com must protect?' parison laid down by that article.

. . character of the taxation whose effect it is which exceeds that burden, that is to say, to consider it as 'a charge having equivalent intended to offset', effect' within the meaning of Articles 12 and 'applies to the turnover equalization tax as 13 of the EEC Treaty and of Article 12 of such, as it is defined in general terms in Regulation No 13/64. Such a view would be paragraph 1(3) of the German Law relating in contradiction with the aforementioned to the turnover tax or else to the turnover judgment of the Court of Justice in Case equalization tax as affecting a given im 57/65, according to which Articles 12 and 13 ported product'. of the EEC Treaty on the one hand and If, in accordance with the judgment deliv Article 95 of the Treaty on the other cannot ered by the Court in Joined Cases 2 and 3/62 be applied 'jointly to one and the same ([1962] E.C_R_ 425) it is accepted that a case'. In the two articles first above-men protective purpose only exists for taxes tioned the concept of 'charges having equiv applying solely to imported products but alent effect' has the same meaning as in not to similar domestic products, the view Article 12 of Regulation No 13/64.

This last finding must over equalization tax is not equivalent to a apply also to importation from third coun customs duty even when, in a given case, it tries. From all this it follows that a national applies to an imported product more heav court cannot consider as inapplicable that ily than the turnover tax applies to a similar fraction of the turnover equalization tax domestic product. charged on importations from third coun If, on the other hand, it is accepted that the tries which exceeds the charge imposed on legal nature of the turnover equalization tax comparable national products. must be examined separately for each pro Even if, moreover, that fraction is regarded duct and that in consequence this tax can in as contrary to the Treaty, private persons a given case be considered as a charge cannot avail themselves of an individual

right to apply to the courts to reduce the tax. inatory, and protectionist effect. 'The prior condition for such a reduction in According to the case-law of the Court the the rate by the Finanzgericht would in fact concepts of 'charge having equivalent be the establishment of a new rate in con effect' and 'internal taxation' are mutually formity with the Treaty, which cannot be exclusive; consequently it is appropriate to brought about on a local scale by a taxation examine whether the taxation in question court' but solely by the legislature of the comes under one or other of these concepts; Member State in conformity with the prin in order to do this it is also necessary to ciple of separation of powers.' interpret Article 95 of the Treaty, even though it only applies to importations from other Member States.

The Wohrmann undertaking was repre such a prohibition only on charges having sented by Messrs Dres, Modest, Heeman, equivalent effect. Gündisch and Brändel, Hamburg; the Government of the Federal Republic of Question (a) Germany by Messrs Everling, Ministerial rat, Hahnfeld, Ministerialrat, and Bülow, The Wöhrmann undertaking maintains that Oberlandesgerichtsrat; and the Commis the prohibitions contained in Articles 12 sion of the European Communities by its and 13 of the EEC Treaty and in Article 12 legal adviser, Mr Thiesing. of Regulation No 13/64 are intended to prevent protective duties hampering or making impossible the importation of for III — Summary of the observations eign products and thus creating distortions submitted by the parties con

of Regulation No 13/64 as in Article 12 et

seq. of the EEC Treaty, as is clear in partic plies to the turnover equalization tax ular from a comparison with Article 12(1) charged in Germany. which concerns trade between Member The Commission points out that for 'internal States. taxation' referred to in Article 95 of the The principles applicable for the definition EEC Treaty, Regulation No 13/64 contains of the factual situations governed respect no provision corresponding to the prohib ively by Article 12 et seq. and by Article 95 ition on the charging of customs duties or of the EEC Treaty are also applicable to the charges having equivalent effect.

In its intended to avoid distortions of competition opinion it also emerges from all these pro within the Common Market. The Treaty visions that the organization of the markets does not require the elimination of internal in milk in the European Economic Com taxes but restricts itself to limiting their munity rests equally on the distinction be rate. In doing so it recognizes that they are tween charges having equivalent effect and of a legal nature fundamentally different internal taxation and that these two con from that of customs duties and charges cepts have here the same meaning as in the having equivalent effect. The case-law of the Treaty. For the definition of these concepts Court of Justice has always taken into con it is of importance to ascertain whether the sideration the general purpose of the tax charge in question is directed towards com ation in question. pensation with regard to similar domestic Even if an equalization tax is too high in a products. According to this criterion the given case, it must be assessed solely in turnover equalization tax is in principle terms of Article 95. If it were otherwise, the internal taxation as is otherwise clear from prohibition imposed by that Article would the German Law on turnover tax.

production. As a general rule Member single legal entity. To the extent to which, in States then impose internal taxation. Article a given case, it exceeds the charge imposed 17 of the EEC Treaty expressly permits upon similar domestic products, the frac them to do so to the extent to which it is a tion in excess cannot be considered as a question of products hitherto subject to charge having equivalent effect. customs duties of a fiscal nature. This interpretation is corroborated by Arti Question (b) cle 112 of the EEC Treaty. Regulation No 13/64 confirms these con The Wöhrmann undertaking alleges that in siderations.

JUDGMENT OF 4. 4. 1968 — CASE 7/67

Moreover Thus it is only possible to take into con it is not possible to speak of a cumulative sideration charges imposed upon a product, multi-stage tax system when the primary without regard to the structure or the material, the semi-finished product and the method of working of the manufacturer in finished product are not themselves taxed view of the fact that, if this were not the under the turnover tax. case, it would be impossible to establish The Federal Government declares that in its whether domestic products or imported view Question (c) has no purpose for the products were taxed in a uniform manner. reasons set out with regard to Question (a). Both milk and milk powder are produced However, by reason of the fundamental by different undertakings in the most importance of Question (c), it is appropriate widely varying conditions. to observe that, according to the unequiv Consequently, with regard to the first alter ocal terms of Article 95 of the EEC Treaty, native contained in this question, it is appro charges imposed indirectly on domestic pro priate to decide that an equalization tax ducts must also be taken into consideration. constitutes a charge having equivalent effect This must be understood as meaning any when neither supply of the similar domestic charge which makes the national product product nor of the primary products is dearer, in particular one imposed on the directly subject to turnover tax. means of production, machines, auxiliary Although, in Case 57/65, the Court stated accessory materials and energy, for other that Articles 12 and 13 of the EEC Treaty on wise this product would be subject to a dis the one hand and Article 95 on the other advantage in the field of competition. cannot be applied jointly to one and the The Commission points out that it is neces same case, that by no means excludes the sary to take into consideration not only any possibility of dividing up the charge in such charge on the similar domestic product or a way that the fraction corresponding to the the immediately preceding primary product charge imposed on domestic products is but also, as is clear from Article 95 of the considered as falling within Article 95 and EEC Treaty, the prior indirect charge.

WÖHRMANN v HAUPTZOLLAMT BAD REICHENHALL

the said Regulation is binding in its entirety The Commission refers to the judgment de­ and directly applicable in all Member livered by the Court in Case 26/62 ([1963] States. E.C.R. 1 et seq.), according to which Article The Federal Government takes the view that 12 of the EEC Treaty creates individual Question (d) has no purpose for the reasons rights. In its view the same applies to Article which it put forward with regard to Ques­ 12(2) of Regulation No 13/64. tion (a).

Grounds of judgment

By order of 15 February 1967, which reached the Court on 20 February 1967, the Finanzgericht, Munich, referred to the Court of Justice under Article 177 of the Treaty establishing the European Economic Community several questions relating to the interpretation of Article 12(2) of Regulation No 13/64/EEC of the Council on the progressive establishment of a common organization of the markets in milk and milk products.

In Question (a) the court referring the question asks the Court to rule whether 'the character of a charge having an effect equivalent to a customs duty within the meaning of Article 12(2) of Regulation No 13/64 is determined by the general protective purposes of the charge or else by the protective effect which it exerts in fact in the case of a given product'.

This question must be examined in the light of the facts of the main action as they have been indicated by the court making the reference.

JUDGMENT OF 4. 4. 1968 — CASE 7/67

of levies for all the protective measures of different kinds previously applied by Member States.

In consequence, Article 12(2) of the same Regulation abolished all national measures having protective effects similar to those of the levy.

Taxation such as that which is the subject of the main action, levied within the framework of legislation relating to the turnover tax, does not constitute a specific tax on imported products, but a general tax applying without distinction to all categories of products, whether domestic or imported, even if charged at the moment of importation.

Such a charge, of an essentially fiscal nature, when it is imposed on importation, is intended to place in a comparable fiscal situation all categories of products what­ ever their origin may be.

Hence, in the absence of a protective purpose, an internal tax of the type referred to by the Court making the reference cannot be considered as a charge having an effect equivalent to a customs duty within the meaning of Article 12(2) of Regulation No 13/64.

THE COURT

in answer to the questions referred to it by the Finanzgericht, Munich, by order of that court dates 15 February 1967, hereby rules:

A tax imposed on the importation of products originating in third countries does not constitute a charge having an effect equivalent to a customs duty within the meaning of Article 12(2) of Regulation No 13/64 on the progressive establishment of a common organization of the markets in milk and milk products when it is imposed as a charge under the national system of turnover tax;

and declares:

It is for the court making the reference to decide on the costs in the present case.

Lecourt Donner Strauß