C-31/70

1. Levies are derived from the Treaty and 2. Products which have suffered damage not from national law and are simulta­ before being imported and which have neously applicable in all the Member therefore lost some value may in spite of States; they act as regulators of the this loss in value affect the agricultural market within the framework of a com­ market in the same way as other products mon organization and are calculated on which were of a lower quality than the the basis of weighted values and having standard quality from the start and regard to standard qualities; they are which are however subject to the general therefore standard charges which do not levy. The reasons why the condition of take account of the individual character­ impaired goods is below the standard istics of the products imported. Products quality do not affect the grounds which oflower quality than the standard quality justify the application of the general levy are therefore subject to the general levy to them. in the same way as products of higher quality.

In Case 31/70

Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof for a preliminary ruling in the action pending before that court between

Deutsche Getreide- und Futtermittel Handelsgesellschaft mbH, Hamburg

and

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

Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure before the Seventh Senate of the Bundes finanzhof (Federal Finance Court). The facts and procedure may be sum­ The latter, which considered that the result marized as follows : of the case was closely dependent on the application of Regulation No 19 of the EEC 1. On 28 February 1963, the Deutsche Ge­ Council of 4 April 1962, decided by order of treide- und Futtermittel Handelsgesell­ 4 June 1970 to stay proceedings and refer schaft mbH ('DGFH') sought customs the following questions to the Court of clearance for maize from the United States. Justice under Article 177 (b) of the EEC According to its declarations, the maize had Treaty: suffered water damage in transit which had caused it to lose 25 % in value. The Zollamt '(1) Must Regulation No 19 of the Council (Customs Office) called for the payment by of the European Economic Community way of levy of a sum calculated in accordan­ of 4 April 1962 concerning the progres­ ce with the rate shown in the import licence. sive establishment of a common organ­ The objection by the DGFH to the Haupt­ ization of markets in the cereals sector

zollamt Hamburg-Altone (Chief Customs be interpreted as meaning that the same Office) and the appeal lodged at the Finanz­ levy must be imposed on maize which gericht (Finance Court) Hamburg were un­ has suffered water damage in transit successful and the case is now pending before being imported and thus lost

some of its value as on maize which has Article 20 of the Protocol on the Statute of suffered no damage? the Court of Justice may be summarized as follows : (2) If so, is this regulation valid? (3) If Question 1 or 2 is answered in the negative, A — Observations submit ted by the Deutsche (a) can a levy be imposed on maize Getreide- und Futtermittel Handels which has suffered water damage before gesellschaft mbH

In this respect it refers to two Handelsgesellschaft mbH, the Government decisions of the Bundesverwaltungsgericht of the Kingdom of The Netherlands and the (Federal Administrative Court) which it Commission of the European Communities claims show that the rate of levy is reduced submitted written observations in accord for damaged goods and that the principal ance with Article 20 of the Protocol on the aim of the levy (or similar special charges) Statute of the Court of Justice which is is to prevent importers from making exces annexed to the EEC Treaty. sive profits. After hearing the report of the Judge Rap The DHGF then examines the first question porteur and the views of the Advocate- and observes that Regulation No 19 does General, the Court decided that no pre not provide explicit rules on the levies paratory inquiry was necessary in this case applicable to cereals which are damaged but and fixed 12 November 1970 as the date of which in spite of the damage they have the hearing. suffered are still cereals for the purposes of The Deutsche Getreide- und Futtermittel tariff classification.

The Commission of the European Com The 'general levy' system is not incompat munities was represented by its Legal ible with the need to make a distinction Legal Adviser, Peter Kalbe. between commodities which have been The Advocate-General delivered his opinion damaged and commodities which have not on 1 December 1970. been damaged; it only implies that the rate of levy calculated on the basis of a repre II — Written observations submitted sentative and fixed quality for cereals pursuant to Article 20 of the (Standard-Qualität) and for a fixed period Protocol on the Statute of the of time applies quite generally to cereals of Court of Justice this quality, even to those 'which are of higher or lower quality than the 'standard The observations submitted pursuant to quality'.

However, the application of this system is 'measures required' postulates the existence only justified in relation to the aims of the of some legislative freedom for the Com levy if it complies with two fundamental munity legislature, it is obvious that the principles: the principle of 'fair taxation' Treaty did not intend by this means to and that of 'the proportionality of means'. confer an unlimited discretionary power and Differences in quality which may exist that this freedom is still subject to the prin between these cereals in comparison with ciple which has been mentioned above and the 'standard quality' and which are not which is characteristic of every state which taken into consideration for the purposes of is governed by the rule of law. and alteration in the rate of levy applicable The Community, which is composed of a are only those variations which are normal collection of States governed by the rule of and customary in the trade. law, is also bound to observe this principle On the other hand, in a case where com as regards its legislative power as well as it modities have been damaged by water and executive power. The legislative measures

Firstly, in every water. The DGFH claims therefore that the state governed by the rule of law the prob second question should be answered in the lem of imposing a charge depends on negative. . whether this charge has a sufficient legis As regards the third question, the DGFH lative basis and not on whether the charge admits that it would be unwarranted having can be passed on to another person. regard to the aims of the levy and to the Secondly, supposing that an insurance principle of the 'proportionality of means' policy against risks incurred in transporting to exempt entirely from the levy contrary, commodities is necessary in order to avoid they should still be considered as cereals these disadvantages, its cost should be taken which are subject to the levy but the rate into consideration by the Commission as a applicable should be graduated and reduced normal component of the make-up of the in proportion to the loss in value which they cif price which is required in order to cal have suffered as a consequence of the culate the rate of the levy. The fact that the damage. In the present case, a reduction of Commission did not take account of this 25 % in the rate applicable (corresponding cost implies that the Community legislature to a loss in value of 25 %) would be quite does not require that such an insurance correct and justified.

This is a clear and unequivocal having regard to the principle of the reference to the principle of the 'proportion 'proportionality of means' laid down in ality of means'. Although the expression Article 40 (3) of the Treaty,

— or else the legislature meant to subject without settling any of the other points in goods which have been damaged and volved in a complete tax system, including goods which are sound to the same levy this problem. The same applies as regards and in this case, if the illegality of the customs duties: the tariff for these duties imposition is not to be simply admitted, was fixed by Article 91 et seq. of the Treaty the exact amount of the levy must be and afterwards laid down in detail by fixed by having recourse to Article 40 Regulation No 950/68 of the Council, but mentioned above. the necessary implementing rules are still for the moment provided for in national customs legislation.

maize. Once the levy to be paid is higher not produce an ambiguity or a gap in the than the residual value of the commodities, system set up by this regulation, because it imports become impossible in practice. To is a feature of this system that it is applied insist in this case that an invariable rate of without having regard to the special char levy should be applied would amount to acteristics of each consignment of imported applying the law unfairly and unreasonably. goods. The Dutch Government emphasizes in this The Commission explains that in fact the respect that in The Netherlands the decree rate of levy is calculated for each category of concerning the system of levies and agri products and for a fixed period of time on cultural refunds 1968, II, provides for the the basis of a standard quality for the possibility of reducing the rate of charge products in question, the standard qualities which is generally applicable on equitable being laid down in Regulation No 61 for grounds if the commodity has suffered the whole Community, and that the stan damage and thus lost some value. dard quality for maize is laid down in The Dutch Government denies that a Article 5. Community law, especially the

JUDGMENT OF 15. 12. 1970 — CASE 31/70

First of all, it was Regulation No 19, the Commission ob legitimate within the framework of the con serves first of all that no conclusions with crete objectives of the common agricultural regard to the present case can be drawn policy and for the purposes of a common from the case-law of the Bundesverwal policy based on quality to promote imports tungsgericht. This case-law exclusively con of high quality products and to make im cerns the application and the interpretation ports of low quality products economically of provisions which governed the German less advantageous through an appropriate organization of the market before Regula

Finally, it was governed by the rule of law, in particular of just as necessary to align the price of the principle of the 'proportionality of damaged maize as that of cereals imported means'. Imposing an identical levy what in good condition and of good quality, ever the quality of the maize imported since it is precisely cheap imports which are produces, it is true, a difference in the likely to disturb the price system on the burden of the charge, which is heavier in domestic market. case of lower quality maize, but this differ Moreover, imposing a single general charge ence is not prohibited by the principles does not have a discriminatory effect, since mentioned above, since these only prohibit this is precisely the type of charge which differences which are not in accordance with ensures the impartiality of the common the purposes of the system or which are system of imports with regard to competi based on considerations which are un tion, and this impartiality would not be connected with it. guaranteed if the charge were calculated Moreover, the Community legislature dis

GETREIDE- UND FUTTERMITTEL HANDELSGESELLSCHAFT ν HAUPTZOLLAMT HAMBURG

Grounds of judgment

1 By an order of 4 June 1970, received at the Court on 1 July 1970, the Bundesfinanz­ hof of the Federal Republic of Germany has referred in accordance with Article 177 of the EEC Treaty, several questions regarding the interpretation and validity of Regulation No 19 of the EEC Council of 4 April 1962 (OJ 1962, No 30).

The first two questions

2 In the first question the Court is asked to rule whether Regulation No 19/62 must be interpreted as meaning that the same levy must be imposed on maize which has been damaged in transit by water before being imported and thus lost some value as on undamaged maize. If this question is answered in the affirmative, the Court is asked to rule whether the regulation is valid in this respect.

JUDGMENT OF 15. 12. 1970 — CASE 31/70

3 Since these two questions are closely connected, they must be examined together.

The latter price is fixed annually by the Member States for a standard quality for the category of cereals in question, whilst the cif price is fixed on the basis of international prices adjusted by reference to differences in quality which may exist by comparision with the standard quality for which the threshold price is fixed.

6 The result of the system which has thus been established is that the levies, which have been calculated on the basis óf weighted values and having regard to standard qualities, are standard charges which do not take account of individual character­ istics of the products imported.

GETREIDE- UND FUTTERMITTEL HANDELSGESELLSCHAFT ν HAUPTZOLLAMT HAMBURG

Products of a quality lower than the standard quality are therefore subject to this levy in the same way as products of a higher quality.

7 The reasons why the condition of goods is below the standard quality do not affect the grounds which justify the application of the general levy to them.

Products which have suffered damage before being imported and which have therefore lost some value may in spite of this loss in value affect the agricultural market in the same way as other products which were of a lower quality than the standard quality from the start and which however are subject to the general levy.

13 This question was only posed by the Bundesfinanzhof in case either one or other of the previous questions was answered in the negative. Since these have been an­ swered in the affirmative, the third question becomes superfluous.

JUDGMENT OF 15. 12. 1970 — CASE 31/70

Costs

14 The costs incurred by the Commission of the European Communities and by the Government of the Kingdom of The Netherlands, which submitted their observa­ tions to the Court, are not recoverable.

15 As regards the parties to the action, these proceedings are a step in the action pending before the Bundesfinanzhof of the Federal Republic of Germany and costs are therefore a matter for that court.

On those grounds,

any factors which might affect the validity of Regulation No 19/62 in this respect.

Delivered in open court in Luxembourg on 15 December 1970.

Lecourt Donner Trabucchi

Monaco Mertens de Wilmars Pescatore Kutscher

A. Van Houtte R. Lecourt

Registrar President

Mr President, calculating the levy, this case involves Members of the Court, defects in condition which must be assessed differently. In this respect, Regula­ tion No 19 contains no provisions and in The plaintiff in the main action, an import particular it does not provide that special firm which has its registered office in features of this kind cannot be considered. Hamburg, applied in January 1963 for It claims that this is a gap in the levy system customs clearance for maize which had been which needs to be filled by means of an imported from the USA. According to its amplifying interpretation to the effect that declarations, the goods had been damaged where there are defects in the condition in transit by moisture and had lost 25% of imported goods only a reduced levy is in value. Regardless of this, the customs payable. If an amplifying interpretation office responsible, on the basis of Regula­ is held to be impossible and on the basis tion No 19 of the Council on the progressive of Regulation No 19 it is considered establishment of a common organization necessary to impose the full levy on goods of the market in cereals (OJ 1962 p. 933), damaged in transit, its validity in this which was then in force, imposed a levy respect would have to be questioned. This according to the rate shown in the import is because there would be a breach of the licence, that is, in the full amount. principle of the equality of taxation, an The import firm considers that this is not infringement of the principle of the equality justified; it claims rather that the levy of taxation, an infringement of the principle should be reduced in proportion to the loss of proportionality and a disregard of the in value. For this reason, having made an prohibition on the imposition of duties unsuccessful appeal, it took the matter right which is derived from Article 12 of the EEC up to the Bundesfinanzhof. In the pro­ Treaty. ceedings, it takes the view that although In view of these problems, the Bundes­ according to Regulation No 19 differences finanzhof stayed proceedings by an order in the quality of the goods imported are of 4 June 1970 and referred the following not to be taken into considerado in questions to the Court of Justice for a