C-3/71

Article 2 of Regulation No 865/68 of 20 of the Common Customs Tariff laid the Council of 28 June 1968 on the down by Regulation No 950/68 of the common organization of the market in Council is not capable of altering the products processed from fruit and vege­ basis of charge of an agricultural levy, tables must be interpreted as meaning and its effect is only to create a pre­ that a levy is chargeable only if sugar sumption with regard to tariff classifica­ has actually been added. tion, against which evidence in rebuttal Additional Note No 2 to Chapter may be brought.

In Case 3/71

Reference to the Court under Article 177 of the EEC Treaty by the Finanz­ gericht (Finance Court) Berlin for a preliminary ruling in the action pending before that court between

GEBRÜDER BAGUSAT KG whose Head Office is in Berlin

and

HAUPTZOLLAMT BERLIN-PACKHOF,

Advocate-General: A. Dutheillet de Lamothe Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure Lehranstalt showed that the imported goods all had a sugar content of 14.4% Between 15 and 24 September 1969 by weight measured by refractometry. Gebrüder Bagusat KG, a limited On the basis of the analyst's report from partnership, submitted to the Berlin- the Zolltechnische Prüfungs- und Spandau Customs Office nine applica­ Lehranstalt, the Berlin-Packhof Principal tions each for the customs clearance and Customs Office applied Additional Note release into free circulation of 75 barrels No 1 to Chapter 20 of the Common of morello cherries in spirit with no Customs Tariff annexed to Regulation added sugar which were imported from No 950/68 of the Council of 28 June Yugoslavia and the total contents of 1968 on the Common Customs Tariff which weighed 14 999 kg. (O.J. 1968 L 172, p.1), whereby the The Berlin-Packhof Principal Customs content of various sugars expressed as Office granted customs clearance and sucrose is considered as the 'sugar con­ adopted for the tariff classification tariff tent'; it also applied Additional Note subheading 20.06B (e) 2 stated by the No 2 to the same chapter, whereby importer. By means of provisional products classified under heading 20.06 notices of assessment it claimed, on the are considered as 'containing added basis of a 32% rate of duty, payment sugar' when the 'sugar content’ thereof of DM 56 546.10 customs duty, DM exceeds 9% by weight, with regard to 215 529.20 excise duty and DM kinds of fruit other than pineapples and 24 965.30 import turnover tax. grapes. It accordingly decided to classify An examination of the samples taken the imported products under tariff sub­ when customs clearance was granted by heading 20.06 B (e) 1 of the Common the Zolltechnische Prüfungs- und Customs Tariff ('other fruits with a

sugar content exceeding 9% by weight'), can be subject to the levy only if which is subject to a levy system. sugar has in fact been added to By final notices of assessment of 16 and them? 20 October 1969 the Berlin-Packhof (b) On the assumption that a sugar con­ Principal Customs Office claimed from tent in excess of 9% by weight must Gebrüder Bagusat payment by way of be regarded as 'added sugar' within levy of an additional sum of DM the meaning of Regulation No 3 604.90 calculated in accordance with 865/68, and that it is irrelevant the rules laid down by Regulation No whether sugar has in fact been 865/68 of the Council of 28 June 1968 added, is this rule compatible with on the common organization of the the objectives of Regulation No market in products processed from fruit 865/68? and vegetables (OJ 1968 L 153, p. 8). (c) If the answer to the second question Gebrüder Bagusat lodged a complaint is in the negative, does it follow against these assessments, which was re­ from the incompatibility thus estab­ jected by a decision of the Berlin- lished that there has been an infringe­ Packhof Principal Customs Office of 30 ment of Community law such as to June 1970. Gebrüder Bagusat appealed make it impossible to impose the against that decision to the Finanz­ levy, or must that levy nevertheless gericht, Berlin. be imposed despite the fact that such The Third senate or the Finanzgericht, was not the intention of the Com­ Berlin, considering that the determining munity legislature? factor in deciding the case was whether Under Article 20 of the Protocol on the the expression 'sugar content', within Statute of the Court of Justice of the the meaning of subheading 20.06 B I EEC, written observations were sub­ (e) 1 of Regulation No 950/68, refers mitted by the Commission of the Euro­ only to sugars artificially added to pro­ pean Communities on 4 April 1971, and ducts resulting from fruit processing, or by the plaintiff in the main action on 6 whether it also extends to natural sugars April 1971. which have not been added, where the After hearing the report or the Judge- proportion of the latter exceeds 9% by Rapporteur and the views of the weight, by order of 12 January 1971, Advocate-General, the Court decided to registered at the Court Registry on 26 open the oral procedure without a pre­ January 1971, stayed the proceedings in paratory inquiry. accordance with Article 177 of the EEC The plaintiff in me mam action ana the Treaty and referred the following ques­ Commission presented oral argument at tions to the Court for a preliminary the hearing on 6 May 1971. ruling: The Advocate-General delivered his

A — The first question Article 2 (4): these two provisions con cern the added sugar content. Further Gebrüder Bagusat, a limited partnership, more the declaration of the importer con the plaintiff in the main action, contests cerning the sugar content has not been that the Council was able in Regulation prescribed by Article 4 (2) of the Regu No 950/68 to give a binding interpreta lation except in cases where sugar has tion of the concepts defined in Article actually been added to the imported

This special nature fol mon Customs Tariff. In fact Additional lows from the actual contents of Regu Note No 2 applies also to fruit 'con lation No 865/68 and from the greater taining added sugar'. In any case the detail of the rules which it lays down; provisions on tariff classification laid it follows above all from Article 38 (2) down in Regulation No 950/68 are the of the EEC Treaty: whilst the provisions most general source of law and that to conceming the customs tariff laid down which exceptions may be made. in Regulation No 950/68 are based on as for the intentions or the community Articles 28 and 111 of the Treaty, the legislature, the plaintiff in the main ac tariff nomenclature laid down in Article tion refers particularly to the reply given 1 of Regulation No 865/68 is based on by the Commission on 21 October 1970 the special provisions laid down in to a written question from a member of

Gebrüder Bagusat. The provisions of import is subject to the imposition of Regulation No 865/68 taken as a whole the levy, since this product contains establish that only added sugar can added sugar'. give rise to the imposition of a levy. Consideration or the purposes of Regu Thus Article 2 (1) provides for a levy lation No 865/68 supports that inter on the various added sugars'; the defini pretation: they are to prevent the com tion of 'added sugar content' given in mon organization of the market in sugar the second paragraph of Article 2 (3) from being affected by the import, with refers not to the 'sugar content', but ex out the imposition of a levy, of sugar pressly to the 'added sugar content'. It added to fruit and vegetable products follows that the method of measuring by during processing.

BAGUSAT v HAUPTZOLLAMT BERLIN

cessed products under conditions similar content is considered as the differ­ to those operative under Council Regu­ ence between the figure obtained by lation No 1009/67' on the common or­ the method of measuring by refrac­ ganization of the market in sugar. tometry and the figure appearing in The system or the legal fiction in con­ column 2 of Annex I, the latter being junction with amending regulations used regarded as corresponding to the by the Commission is self-contradictory, natural sugar content. The amount of leads to discrimination and hampers the levy is determined by multiplying trade with third countries in an unjusti­ that difference by the levy applicable fied manner. On the contrary a system of to sucrose.

JUDGMENT OF 17. 6. 1971 — CASE 3/71

Nevertheless paragraph (3) of words, the customs nomenclature which that article to which paragraph (4) re follows the application of Regulation No fers, defines the expression 'added sugar 865/68 was taken from this regulation content' as the reading obtained by using and is now subject to the rules of tariff refractometer (total sugar content), re classification and interpretation provided duced by the figure appearing in column in customs law. 2 of Annex I (presumed natural sugar Subheading 20.06 B I (e) 1 mentions content). The legal fiction thus created fruit with a sugar content' and not, as cannot be interpreted restrictively: such is the case for products under subhead an interpretation is in clear contradic ing B II, fruit 'containing added sugar'. tion with the fact that the basis of the It is not possible to equate the expres application of the levy is formed, not sion 'with a sugar content' under sub by the sugar content indicated by the heading B I (e) to the expression 'added refractometer but by the content ob sugar'; in fact Additional Note No 2 to tained after deduction of the presumed Chapter 20 provides that: quantity of natural sugar.

The tion automatically excluding evidence to application of the fixed method enables the contrary. therefore, even more than the individual That fiction, however, is or direct sig ized method, a sugar content which in nificance only for the classification of fact has not been added to be subjected the product in the customs nomencla to a levy. If the legislature foresaw the ture; the Commission, unlike the defend possibility in the case of Article 2 (2) of ant in the main action, is not of the making a natural sugar content subject opinion that the Additional Notes to to a levy, it is not contrary to the logic Chapter 20 have become an integral part of the system that it also accepted this of Regulation No 865/68 and the legal possibility in the method of calculation

defined in paragraphs (3) and (4) of that This question must be examined starting article. from the viewpoint that there is a lacuna Furthermore, the practical implementa in the regulations which it is for the tion of the regulations concerned can be courts to fill. ensured only by this means. According to the concepts of German It is impossible to establish with cer law, there is a lacuna in a law and the tainty whether the sugar contained in court may fill it, when it may be con imported products is natural sugar or cluded that the legislature, if it had en added sugar by having recourse only to visaged the case, would have made pro chemical analysis; the admission of other vision for it, in accordance, for example, evidence (a declaration by the importer, with the rules adopted for a case which sampling or an official declaration by is analogous in fact or in law. the exporting third country) generally Evidence that Regulation No 865/68

to the levy. crete ascertainment of the added sugar To fill this lacuna, recourse must be had content, the less so since it would affect to the objectives of Regulation No 865/ several tariff headings. 68 and to its meaning within the frame In conclusion, the Commission proposes work of the organization of the agricul that the following reply should be given tural markets. However, the purpose of to the first question: 'The definition of the regulation is merely to prevent im the expression "added sugar content" portation without levy of the raw mater which appears in the second paragraph ial 'sugar' as a constituent incorporated of Article 2 (3) of Regulation No 865/68 into products processed from fruit and

This is an in to the objectives pursued by the regu evitable consequence of a method of lation? calculation founded on the use of

averages and necessarily based on a tion No 865/68 is properly reasoned: fiction. The view that the wording and it appears clearly from the recitals in the objective of Regulation No 865/68 the preamble thereto that only the imply that a levy should be imposed constituent 'added sugar' is subject to only when the products have actually a levy, in order to make the rules on had sugar added, disregards these in the sugar market effective. This implies evitable restraints and confuses the that the natural sugar contained in the ratio legis and the method chosen by products covered by that organization the Community legislature; that method of the market must not be subject to must certainly correspond to the objec

The fact that the Common Customs Tariff) are in certain circumstances, especially at subject to customs duty of a maxi harvest time in a particularly good year mum of 16% without a levy; morello from the climatic point of view, morello cherries preserved in spirit are sub cherries may show a high sugar content, ject to customs duty of 32% and to does not invalidate the presumption in a high levy on the sugar. law, which only recognizes a maximum — As opposed to what has happened natural sugar content of 9% by weight with regard to concentrated fruit for this fruit.

tive to be achieved. C — The third question It is quite possible to establish by means of chemical investigation whether the The limited partnership Bagusat is of imported products contain only natural the opinion that the third question sugar or also added sugar. should be interpreted as including a Further, in the present case the legal total assessment of the validity of the limits placed on the implementation of levy system established by Regulation a fiction or irrebuttable presumption are No 865/68 as concerns tariff heading disregarded.

BAGUSAT v HAUPTZOLLAMT BERLIN

The reasons a typical case, which would lead to a given as the basis of the regulation in reversal of the burden of proof. question satisfy the requirements laid (d) According to Article 18 or Regula down by the Court: the choice of a tion No 865/68 the latter must be so method of calculation which prescribes applied that appropriate account is recourse to fixed rates and necessarily taken, at the same time, of the objectives results in differences from real values set out in Articles 39 and 110 of the is in no way so unusual that a special Treaty. mention would have had to be made However, the objectives or Article 39 of it in the statement of the reasons on are not in any way called in question which the regulation is based. by the importation without levy of (b) To raise the objection of discrimina morello cherries in spirit without added tion is problematical within the frame sugar, marasca cherries, which are parti work of tariff law: customs duties are cularly suitable for the chocolate indus not fixed according to proper scientific try and are not produced within the methods, but are the culmination of a

morello cherries in spirit; because of ber 1967, reserved to the Community this a special solution for these pro the right to levy in addition to the ducts cannot amount to discrimina bound customs duty an additional duty tion. Furthermore, the difference corresponding to the import charge on between the real and the presumed sugar; heading 20.06 B I is exempt from natural sugar content is much smaller the reservation and it follows from this for morello cherries than for con that no levy may be imposed on pro centrates; the difference found to ducts under that heading. exist between the presumption and The Commission, although it appears to reality justified special rules for the it superfluous to reply to the third latter.

The first question

2 The first question asks whether Article 2 of Regulation No 865/68, in con­ junction with Article 9 of that regulation and with the rules on the Common Customs Tariff (Additional Note No 2 to Chapter 20, tariff heading 20.06 B I (e), may be interpreted as meaning that when the sugar content of the imported product, in this case of cherries in spirit, ascertained by refrac­ tometry exceeds 9% by weight it must be considered that they contain 'added sugar', or whether the levy may be imposed only if sugar has in fact been added.

3 Under Article 2 (1) of Regulation No 865/68 a levy 'on the various added sugars' may in certain circumstances be imposed in addition to the customs duty which can be demanded under this regulation. This levy is determined in accordance with the conditions laid down by paragraphs (2) to (6) of the same Article, including Annexes I and III, which respectively lay down fixed sugar contents and a method of analysis whereby in certain circumstances the true sugar content can be determined by way of exception to the fixed values. Article 9 (2) of the same Regulation provides moreover that 'The general rules for the interpretation of the Common Customs Tariff and the special rules for its application shall apply to the tariff classification of the products covered by this Regulation'. Under Additional Note No 2, appearing at the

BAGUSAT v HAUPTZOLLAMT BERLIN

head of Chapter 20 of the Common Customs Tariff fixed by Regulation No 950/68 of 20 June 1968 (OJ L 172, p. 86), 'The products classified under heading No 20.06 shall be considered as "containing added sugar" when the "sugar content" thereof exceeds by weight the percentages given hereunder, according to the kind of fruit concerned:... other fruits ... 9%'.

6 This interpretation is not affected by Additional Note No 2 to Chapter 20 of the Common Customs Tariff, since this provision, incorporated in a regulation concerning customs duties, cannot alter the basis of charge of an agricultural levy, especially since it is referred to by Article 9 (2) of Regulation No 865/68 only for the purposes of 'tariff classification' of the products to which the regulation relates. Accordingly, this additional note can have no other purpose except to give guidance, on the basis of the total sugar content, to facilitate the tariff classification of products within the category of fruit sub­ ject either to a customs duty and a levy, or to a customs duty alone. In view

JUDGMENT OF 17. 6. 1971 — CASE 3/71

of the provisions of Regulation No 865/68, the effect of that note is to estab­ lish that products with a sugar content of less than 9% are exempt from the levy, whilst creating, in the case of products with a higher sugar content, a presumption with regard to classification against which evidence in rebuttal may be brought. When such a product has a sugar content exceeding 9%, it is therefore open to the importer to prove, where appropriate, that it contains only natural sugar.

7 The answer must therefore be given that the provisions of Article 2 of Regulation No 865/68, in conjunction with Additional Note No 2 to Chapter 20 of the Common Customs Tariff, to which reference is made by Article 9 of the same regulation, subject to the levy only those products processed by the actual addition of sugar, but that if the sugar content of a product corning under tariff heading 20.06 B I (e) exceeds 9%, it is for the importer to prove that the product contains only natural sugar.

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Com­ munity, especially Article 177;

BAGUSAT v HAUPTZOLLAMT BERLIN

Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

in answer to the questions referred to it by the Finanzgericht, Berlin, by order of that court of 12 January 1971, hereby rules:

The provisions of Article 2 of Regulation No 865/68 of the Council of 28 June 1968 on the common organization of the market in products processed from fruit and vegetables, in conjunction with Additional Note No 2 to Chapter 20 of the Common Customs Tariff, to which reference is made in Article 9 of the said regulation, must be inter­ preted as meaning that only products processed by the actual addition of sugar are subject to the levy, but that if the sugar content of a pro­ duct coming under tariff heading 20.06 B I (e) exceeds 9% by weight, it is for the importer to prove that the product contains only natural sugar.

DELIVERED ON 27 MAY 1971 <apnote>1</apnote>

Mr President, there is a levy on the import of sugar Members of the Court, from third countries into the Com­ munity. Although the problem created by this The fruit and vegetable market is like- case is very complicated its origin is wise an organized market, but it is one simple. of the few markets of this type in The Community sugar market is an respect of which there are no levies or organized market and, as you know, refunds, imports being subject only to

1 — Translated from the French.