C-13/70

JUDGMENT OF THE COURT 16 DECEMBER 1970<apnote>1</apnote>

Francesco Cinzano & Cia GmbH ν Hauptzollamt Saarbrücken<apnote>2</apnote> (Reference for a preliminary ruling by the Bundesfinanzhof)

Case 13/70

Summary

Quantitative restrictions — Elimination — State monopolies of a commercial nature — Field of application of Community law — Standstill — New restrictive measure — Concept (EEC Treaty, Article 38)

The expression 'measure' appearing in import duty on a product, a constituent part Article 37 (2) of the EEC Treaty is closely of which is subject to the monopoly, may linked to the definition of the activities con­ thus amount to a 'new measure' within the stituting a State monopoly of a commercial meaning of Article 37 (2). character as set out in paragraph (1) of the A duty levied on imports of products from same article. other Member States linked to the existence The application of Article 37 is not limited of a State monopoly and applied for the to imports or exports which are directly first time after the entry into force of the subject to the monopoly but covers ail Treaty does not amount to an infringement measures which are connected with its of Article 37 (2) as long as such new charge existence and affect trade between Member is imposed on the imported product only to States in certain products, whether or not the same extent as on domestic products subject to the monopoly. The introduction, affected by the monopoly. after the entry into force of the Treaty, of an

Hauptzollamt (Principal Customs Office) Saarbrücken,

on the interpretation of Article 37 (2) of the EEC Treaty,

THE COURT

composed of: R. Lecourt, President, A. M. Donner and A. Trabucchi, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore and H. Kutscher Rapporteur), Judges,

Advocate General: A. Dutheillet de Lamothe

Registrar : A. Van Houtte

CINZANO v HAUPTZOLLAMT SAARBRÜCKEN

The monopolgesetz in such a way that, hence defendant Hauptzollamt is of the same forth (and without further details), the opinion as the Finanzgericht. following are also regarded as 'products containing spirits of wine' : wines and drinks assimilable to wine having a content by II — Terms and reasoning of the volume of spirits of wine exceeding 14% as order making the reference well as drinks with a wine base having a content by volume of spirits of wine ex ceeding 10.5%.

Having failed in the another Member State (for example administrative objection ('Einspruch') vermouths) according to the content of which it had lodged against this imposition spirits of wine exceeding a given maxi with the Hauptzollamt (Principal Customs mum, whereas previously as a general Office) at Saarbrücken, Cinzano then rule it levied that tax only in cases where brought proceedings in the Finanzgericht the original product (for example wine) (Finance Court) of the Saarland before had lost its particular characteristics which it did not succeed either.

JUDGMENT OF 16. 12. 1970 — CASE 13/70

'Is there an infringement of Article 37 (2) ities submitted written observations. of the EEC Treaty when, during the After hearing the report of the Judge- course of the second stage of the Common Rapporteur and the views of the Advocate- Market, a Member State takes advantage General the Court decided to open the oral of the existence of a State monopoly to procedure without a preparatory inquiry. subject to it directly or at least indirectly At the hearing on 29 October 1970 Cinzano, the import of a group of products which the Government of the Federal Republic of were not governed by it until then, with Germany and the Commission of the the consequence that the total amount of European Communities presented oral the charge by way of entry duties is raised argument. to approximately six times the previous The Advocate-General delivered his opinion level?' at the hearing on 12 November 1970.

submitted under Article 20 of the Statute of the Court of 2. Cinzano then sets out the reasons for Justice of the EEC which it considers that the monopoly in ethyl alcohol instituted in Germany con stitutes a monopoly of a commercial The observations put forward by Cinzano character within the meaning of Article 37 may be summarized as follows : (1) of the EEC Treaty. It points out that although in German law 1. The question submitted to the Court the contested taxation intended to offset the originates in the fact that, as from a partic effect of domestic charges imposed on ular date in the course of the second stage of products subject to the monopoly (and the Common Market, the import from which it calls 'Monopolausgleichsabgabe' other Member States of quality vermouths —monopoly equalization charge) amounts ready for consumption was subjected to the to a special tax on consumption (an excise levy of an entry duty which had never pre duty), on the contrary in respect of Com

level which it previously reached. The character of the taxation whose effect it is

intended to offset. The disputed charge is — the old rules gave rise to difficulties be intended to offset the effect of certain taxes cause there was controversy on whether imposed on domestic products, namely the certain drinks, including vermouths, Branntweinsteuer and the Branntweinauf came within the category of drinks upon schlag, which from a basic point of view are which the Branntweinmonopolgesetz monopoly taxes (as Cinzano endeavours to imposed the compensatory duty; show in detail); consequently, it says, the compensatory duty is also a monopoly tax. — judgments given in 1963 by the Bundes finanzhof (see I,1 above) did not decide

The objective of Article 37 (2), which is a high alcohol content which, if the cer clearly to prevent the standstill obligation tificates of the countries of origin were to laid down in Article 12 from being evaded be accepted, had not had alcohol added; by means based on rules of law concerning although there were reasons to doubt the monopolies, and the place which that provi truth of those certificates, it was not pos sion occupies in the general context of the sible on most occasions to prove the ad Treaty show that monopoly taxes must be dition of alcohol; regarded as charges having an effect equiva lent to that of customs duties within the — this was the situation which the 1966 le meaning of Article 12. Cinzano states that furthermore the con gislation remedied (see I, 1 above); it fixed the threshold value so high that as a tested legislation infringes the standstill general rule only added alcohol was obligation set out in Article 37 (2); the taxed, whilst the alcohol resulting from company gives factual details intended to fermentation in the wine was not; in prove this.

ment of the Federal Republic of Germany set out in Article 37 (2). Put like this, the may be summarized as follows: question allows of a negative reply accord ing to the Federal Government. 1. The Federal Government begins by de It states that the German monopoly of scribing the legal situation existing in Ger ethyl alcohol is of course a State monopoly many as well as the development of legisla of a commercial nature within the meaning tion within the sphere here in question by of Article 37 (1) but its field of application making the following points in particular: does not extend to vermouths produced by

the fortification of wine. Further the dis The situation of act upon which the Bundes puted legislation should be considered ex finanzhof is required to decide comes within clusively in relation to Article 95 of the EEC the field of application of Article 37, it Treaty, as it is not equivalent to a new states. No doubt in the case of the importa measure within the meaning of Article 37 tion of vermouth, the intervention of the (2). This legislation has filled a gap in the German customs is limited to levying the tax system relating to ethyl alcohol. It Monopolausgleich on the amount of the would not be justifiable to tax the whole of content of spirits of wine exceeding 10.5%; the ethyl alcohol contained in medicines but even that form of action is capable of and potable spirits whilst letting the 'determining or appreciably influencing' additional ethyl alcohol contained in wines imports under the provisions of Article 37. and wine-based drinks with a high alcohol The same result would be reached, further content escape the tax, as the latter are more, if the situation wree to be judged in precisely the products which compete with relation only to Article 95. potable spirits.

From all wine. these considerations it contends that there is The observations put forward by the Com reason to reply as follows to the question put mission of the European Communities may by the Bundesfinanzhof: be summarized as follows : 'To the extent to which an interpretation The Commission begins by painting a of Article 37 (2) is requested, it must be picture of the legal situation existing in the held that that article of the EEC Treaty Federal Republic of Germany in respect of prohibits any new measure leading to dis the economic sector in question here. crimination between the nationals of As to the reply to be given to the question Member States in the conditions under put by the Bundesfinanzhof, it points out which goods are supplied or marketed. that in order to understand paragraph (2) of There is no discrimination within the Article 37 it is necessary to refer to para meaning of that provision when a newly

CINZANO v HAUPTZOLLAMT SAARBRÜCKEN

Grounds of judgment

1 By an order of 25 February 1970 received at the Registry on 6 April 1970, the Bundesfinanzhof has requested the Court under Article 177 of the Treaty establish­ ing the EEC to rule 'whether there is an infringement of Article 37 (2) of the EEC Treaty when a Member State, in which imports of ethyl alcohol are subject to a State monopoly, imposes as from 1 April 1966 a tax (intended to offset the fiscal charge imposed on domestic ethyl alcohol) on drinks with a wine base imported from another Member State (for example vermouths) according to the content of spirits of wine exceeding a given maximum, whereas previously as a general rule it levied that tax only in cases where the original product (for example wine) had lost its particular characteristics through the addition of spirits of wine'.

2 It may be seen from the file submitted that this question relates to a State monopoly which is mainly concerned with the marketing of domestic ethyl alcohol and imports of the same product. It is further stated in the grounds of the order referring the matter that the measure which is the subject of the main action is one by which after the entry into force of the Treaty the national legislature extended an existing tax to imports of products which had not hitherto been subject to it. These factors must be taken into account in deciding upon the reply to be given to the question put by the national court.

3 It was claimed that the introduction of the tax at issue does not come within Article

37 (2) because it is not covered by monopolies within the meaning of that article.

8 Thus it must first be ascertained whether the extension to imported products of a charge previously imposed only on similar domestic products subject to a monopoly may be regarded as amounting to discrimination regarding the conditions under which goods are procured and marketed.

9 In order to amount to discrimination regarding the conditions under which goods are procuted and marketed within the meaning of Article 37 (1), the new duty must have the effect of imposing higher charges on the imported product than on the sim­ ilar domestic product. Such is not the case if the former is subject to the same charge as the second. There is therefore no discrimination within the meaning of the said article when the imported product is subjected to the same conditions as the domestic product subject to the monopoly.

10 It must, further, be established whether the new duty restricts the scope of the articles dealing with the abolition of customs duties and quantitative restrictions within the meaning of Article 37 (2).

11 As long as the said measure has the purp o se merely of applying to intra-Community trade a duty which before the entry into force of the Treaty was imposed only on similar domestic products, that extension does not have the effect of putting it on the footing of a customs duty or a charge having equivalent effect. Lastly, the duty in question by its nature has nothing in common with a measure having an effect equivalent to that of a quantitative restriction.

12 It is therefore appropriate to reply to the Bundesfinanzhof that a duty levied on imports of products from other Member States linked to the existence of a State monopoly and applied for the first time after the entry into force of the Treaty does

THE COURT

in answer to the question referred to it by the Bundesfinanzhof by an order of that court of 25 February 1970, hereby rules:

A duty levied on imports of products from other Member States linked to the existence of a State monopoly and applied for the first time after the entry into force of the Treaty does not amount to an infringement of Article 37 (2) as long

OPINION OF MR DUTHEILLET, DE LAMOTHE —CASE 13/70

as such new charge is imposed on the imported product only to the same extent as on domestic products affected by the monopoly.

Lecourt Donner Trabucchi

Mr President, a monopoly in the purchase of the raw Members of the Court, product established by a law of 8 April 1922, which has since been frequently amended. In order to have a proper understanding of The State buys the raw product, 'subjects it the origin and scope of the present case it is to a process known as 'rectification' and necessary, I believe, to recall briefly the then sells it to the consumers. main features and the evolution of the For the products subject to the monopoly, German legislation relating to alcoholic the fiscal system is at present as follows: drinks. I must apologize to those of you who are 1. With regard to alcohols produced within familiar with this legislation, but perhaps the national territory the State has a you are not all familiar with the topic to the monopoly in the purchase and treatment of same degree. the raw product but it may waive the exer­ The German legislation relating to alcoholic cise of that monopoly. drinks is, like most European legislation, When it exercises its monopoly it levies a based upon a fundamental and simple dis­ tax known as the Branntweinsteuer ánd tinction, the distinction between: when it exempts the producer from the obligation of delivery, it imposes a surtax — on the one hand, beverages obtained called the Branntweinaufschlag. through natural fermentation, that is to say, essentially wines and beer; and 2. With regard to imports, the monopoly — on the other hand, beverages obtained by has the exclusive right to import raw or distillation or, generally, by any process rectified alcohol apart from certain excep­ tions which are confined to a restricted list. other than fermentation. As for other spirits the purchasing monop­ The essential difference between the legal oly does not apply, but a tax called the systems applicable to these two categories Monopolausgleich or monopoly equaliza­ of beverages is as follows : tion duty, which corresponds in principle The first category is marketed freely. to the fiscal charge imposed on domestic The second, on the other hand, is subject to alcohols or potable spirits, is levied on such