C-77/72

and

AZIENDA AGRICOLA MAYA, Pieve de Soligo,

defendant in the main action,

on the interpretation of Articles 13, 30, 86 and 92 of the Treaty establishing the European Economic Community,

THE COURT

composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner (Rapporteur), H. Kutscher, C. Ó Dálaigh and M. Sørensen, Judges,

I — Facts and procedure 3. Does the levying of a tax (or a financial charge) collected on the The facts and procedure may be basis of a percentage calculated in summarized as follows: relation to the value of the product imported from other Member States The plaintiff in the main action, having constitute an infringement of Article bought from the defendant in the main 13 (2) of the Treaty, or any other rule action a large quantity of eggs, delivered of the Treaty of Rome prohibiting in cardboard containers, stated that, in any special taxation on imports addition to the price of the eggs and the coming from other Member States? packaging, the invoice charged him with a sum of 2 908 lire representing a tax of 4. Are Articles 30 and 86 of the Treaty 1.75 % described as 'Contributo Ente provisions which are directly Nazionale per la Cellulosa e per la applicable in the Member States? Carta', levied on that packaging which 5. Can the imposition on imported had been imported from Germany. products coming from other Member Considering that this duty was States of a duty intended to finance incompatible with the Treaty, he the activity of a body governed by demanded reimbursement and, on failing public law other than the State to obtain satisfaction, applied to the constitute an infringement of Article Pretore of Conegliano for an order for 30 and Article 86, first paragraph, of repayment. the Treaty?

The oral observations of the plaintiff in because even independently of the the main action, the Italian Government granting of such reservation, a and the Commission were made at the preliminary examination as to the hearing on 4 April 1973. existence of the conditions set forth in The Advocate-General presented his Article 92 is always necessary to opinion at the hearing on 7 May 1973. determine whether a national measure is dependent on this provision. A systematic interpretation of Articles II — Observations submit

dispute. These proceedings, because of Lütticke v Hauptzollamt Sarrelouis, Rec. their extension to the new Member 1966, p. 311) are not satisfied. States, are still current. The case law of the Court on Article 93 leads to the same conclusion. If the 1 and 2. First and second questions: On judgment of 15 July 1964 (Case 6/64, the interpretation of Article 92 Costa v Enel, cited above) refused to recognize that this provision has any The Commission submits that a negative direct offer — except for the last reply should be given to the question sentence of paragraph (3) — then one relating to the direct effect of Article 92. cannot admit to the existence of such The conditions of application (para effect in regard to Article 92 which is graph (1)), the reservations (paragraph merely implemented by Article 93. (1)), and the established exceptions (paragraph (2)), or those capable of In addition, it is, in the circumstances, a being so (paragraph (3)), which this question of aid existing at the time of the Article lays down, involve a complex entry into force of the Treaty, whereas and highly technical examination of each efforts to recognize a direct effect in individual case, leading, according to the Article 92 are only aimed at new aid, i.e. case in question, either to the abolition that notified but implemented in or to the modification of the system of infringement of Article 93, well before aid in question. the Commission has made any decision

CAPOLONGO v MAYA

and 86 — for existing aid, from the date fixed by the decision of the Commission under Article 93 (2), first paragraph; As to the fourth question, the Commission is of the opinion that both — for new aid, from the moment of its Article 30 and Article 86 have direct application, in violation of the effect. One must reject the possibility obligation to notify, or before a final that the taxation in question infringes decision has been taken. these two Articles (fifth question).

undertakings. percentage, basis or detailed rules of levy on domestic products and imported The import activity of the Ente Nazionale and the exclusion of aid for products, constitute an infringement of Article 13 (2) or of any other rule which raw material and products directly prohibits the application of a special imported by consumers does not fall taxation on imports coming from other under the scope of Article 86 either; Member States? When the question is direct importation is not rendered formulated in this way, a negative reply impossible and the discrimination comes must be given. within the sphere of aid and must therefore be considered in the light of In theory, one could speculate whether,

JUDGMENT OF 19. 6. 1973 — CASE 77/72

yet published). C — Observations of the plaintiff in the main action 2. On the interpretation of Article 30 The plaintiff in the main action The same considerations apply mutatis mutandis to the interpretation of Article examines in succession (1) the problems 30 of the Treaty, prohibiting quantitative related to the interpretation of Article 13 restrictions and measures having (the third question of the national court) equivalent effect. When the charge and those relating to the respective areas imposed on imported goods arises from of application of that provision and of a more general system of taxation Article 95, (2) the problems relating to applying in the same way to domestic the interpretation of Article 30 (the first goods, it is no longer a question of part of the fourth and fifth questions), distorting importation or of restricting (3) the problem of the direct application the free movement of goods. of Article 92 (the first and second questions) and, finally, (4) the

Article 93 of the Treaty has run its meaning of Article 95 of the Treaty. course. Despite the words 'internal taxation of In any event, the aid granted by the any kind', this provision only concerns ENCC is not incompatible with Article the financial obligations imposed on individuals by public authorities without 92, for it permits a reduction in the price any reciprocal benefit. of press publications and therefore corresponds to aid having a social Therein lies an essential feature of character granted to consumers, as taxation properly so called and referred provided for by Article 92 (2). This aid to only by Article 95 (Judgment of the also allows for the development of the Court of 4 April 1968, Case 31/67, Stier newspaper industry without affecting v Hauptzollamt Hamburg, Rec. 1968, p. trading conditions to an extent contrary 356). to the common interest; it therefore falls It follows from this that Article 95 has under the exemption contained in Article no application to 'parafiscal' taxation 92 (3). introduced to cover payments for the

benefit of persons belonging to definite other hand, foreign operators not only groups, distinguished by reference to a receive no benefit as a set-off against the professional occupation, a particular duty paid by them, but such duty is used economic and social situation, or to the specifically to increase the competitive use of a particular service. strength of Italian undertakings at their expense. Moreover, by its judgment of 1 July 1969 (Joined Cases 2 and 3/69, Sociaal The negative effect of the ENCC duty is Fonds voor Diamantarbeiders, Rec. not even compensated by passing the 1969, p. 211) the Court has impliedly charge on to the consumer. Such as rejected the application of Article 95 to transfer is not total, nor has it much parafiscal taxes. The ENCC duty effect. belongs precisely to this category. From this the plaintiff in the main action In the second place, Article 95 is only concludes that the illegality of the concerned with socalled 'refundable' taxation in dispute 'does not result from taxation, i.e. repayable in the case of its discriminatory rates but from its export. But if Article 2 of the Ministerial fundamental nature which places it in Decree of 3 July 1940 concerning the conflict with the principle laid down by Article 95'. ENCC provides that the duty does not apply to products destined for export, Thus the duty constitutes a charge then this exemption only operates at the having an equivalent effect to a customs stage of the first transfer abroad of duty: it is levied on crossing the border, national paper manufacturing. There is it increases the price of the products no integral refund on subsequent export concerned and is not collected in the by an Italian consumer. exclusive interests of the importer. The application of Article 95 also There is no exception to the prohibition implies that the taxation of domestic and on similar charges having equivalent imported products must be comparable effect, despite the fact that the duty is for the existence of any possible classed as an aid, and is even legal. discrimination to be proved. This is not Therefore, the plaintiff in the main so in this case, since both the chargeable action submits that the following reply act and basis of the taxation and its be given to the third question: 'Article results differ. While the collection of the 12 applies equally to customs charges duty in dispute in respect of domestic resembling duties, even when such duties products is made at the time of the are intended to finance aid compatible transfer of property from the producer with Article 92 of the Treaty'. to the consumer, imported goods are taxed on crossing the border, whether 2. On the interpretation of Article 30 transfer of property takes place or not. (first part of questions 4 and 5) Furthermore, the chargeable basis for To the extent that it does not come domestic products is constituted by the price indicated on the invoice (Art. 1 of under the prohibition of Article 13, the the Ministerial Decree of 3 July 1940). ENCC duty must be considered as a Whereas for imported products, the tax measure having an effect equivalent to a is based on the normal price of the quantitative restriction, prohibited by product (Art. 7 of the same Decree), Article 30.

In addition, the activities of the ENCC While the objectives laid down in Article in the sector of newsprint has tended, as 2 of Law No 1453 of 13 June 1935 appears from a number of its annual creating the ENCC indicated clearly that reports, to regulate this market by it was to be an instrument of a policy of controlling imports, with a view to self-sufficiency, subsequent documents ensuring the regular supply of newsprint. show what various types of aid have As to the direct of Article 30, that been granted by the ENCC. This Article, in spite of its general wording, institution has concentrated its activities fulfils all the conditions necessary for a particularly on aid to paper producers, provision of the Treaty to be considered on aid to the newspaper industry by as having direct effect. The only problem intervention in the purchase of raw is that relating to determining the date of materials and by exemption from the entry into force of this direct effect. duty for paper destined for the press, on aid to small and medium-sized According to a decision of the Council of 26 July 1966 accelerating the undertakings by direct import at reduced timetable (Decision No 66/532, OJ 1966, prices of the paper necessary to satisfy 21. 9. 1966, p. 2971), all quantitative their requirements, and on aid to the restrictions must be abolished from 1 paper industry in general by July 1968. That is also the case with guaranteeing it markets. measures having equivalent effect. If one In addition, the ENCC finances several does not adopt this solution, the direct research programmes appertaining both effect of Article 30 must, in any event, to the agriculture and forestry sector and apply from the end of the transitional to the paper industry. period, since by Article 32, measures These various aids are clearly prohibited having a direct effect on quotas must be by Article 92. As the ENCC is a public abolished by the end of this period at the agency, the aids which it grants must be latest. A fortiori, the same timelimit considered as State aids, or, in any event, must apply for products in free as granted 'by means of State resources'. circulation. The aids tend to favour certain products The plaintiff in the main action prefers and certain undertakings, namely the the first solution. Italian agricultural undertakings pro­ He therefore proposes that the Court ducing cellulose, the Italian paper should find that the direct effect of industry and the Italian publishing houses. Article 30 of the Treaty operates from 1 July 1968, or alternatively from 1 They allow domestic producers to January 1970 and to interpret this reduce their production costs, the paper Article as prohibiting measures industry to gain markets at prices lower introduced by a State involving, either than the world market prices, and the directly or indirectly, the packaging of editors of newspapers and periodicals to the product without any objective reduce the costs of the Italian language justification, as well as the activities of a publications and to improve the public agency which, by the preserving competitive position of their non-Italian of quotas, prevents or renders more publications on world markets.

These aids affect commerce between position to discover its existence. Such a Member States not only by their situation cannot be justified in the light anti-competitive effect, but also by the of Article 93 (1) of the Treaty. method of their financing. This method In addition, Article 93 (1) involves the of financing by duty has already been obligation to notify the Commission of examined by the Court in Case 47/69 'existing' aid, in the same way as does (Judgment of 25 June 1970, Government Article 93 (3) in respect of new aid. of the French Republic v Commission, Rec. 1970, p. 487) in which it recognized Once this obligation to notify has been the protectionist effect brought about, in established, it follows automatically that, that particular case, by the payment of once there has been notification, aid duties by non-Italian undertakings which must be considered lawful as long as the consequently suffered damage.

The latest date for the entry into force of the prohibition expressed therein is not addressed to the Member States. It is rules of Article 92 abolishing aid. formulated in terms of particular severity This is confirmed by an analysis of and with sufficient clarity and precision. Article 92 (3) (c) according to which The only obstacle to the direct effect of certain aids are to be progressively reduced under the same conditions as Article 92 lies in the fact that, for the abolition of aid existing at the time of apply to the elimination of customs the entry into force of the Treaty, a duties, i. e. at the latest by the end of the transitional period. decision of the Commission is provided for by the Treaty. Finally, on the ending of this period, the The relevance of this objection must powers which the Commission derives however be appraised with regard to all from Article 93 will come to an end, the consequences which a total denial of except for those under Article 93 (3). the direct effect of this provision Thus Article 92 will become immediately

JUDGMENT OF 19. 6. 1973 — CASE 77/72

Finally, this solution results implicitly payments made after that date, from the overall scheme of the Treaty. It expecially if the Commission came to is for the Court of Justice to see that the consider the aid in dispute as implementation of the rules on incompatible with Article 92 and an competition, an integral feature of the appeal by the Italian Government organization of the common market, is against such a decision was rejected by not delayed sine die. the Court.

If the Italian State and the ENCC had With regard to the interpretation of informed the Commission in time, the Article 86, the plaintiff observes that the levy of the ENCC duty would have holding of a dominant position in the already been abolished, at least for common market does not in itself imports. Recognition by the Court of the constitute an abuse prohibited by Article direct effect of Article 92 from 31 86. There would be an abuse if such a December 1969 would permit importers dominant position was maintained or to demand the reimbursement of reinforced with the aid of a duty.

Grounds of judgment

1 By order dated 20 November 1972, received at the Court Registry on 27 November 1972, the Pretore of Conegliano referred several questions, under Article 177 of the EEC Treaty, on the interpretation of Article 92 (1), Article 13 (2), Article 30 and Article 86 of the Treaty.

CAPOLONGO v MAYA

2 It appears from the file that, as the invoice in dispute contained, in explanation of the item 'ENCC Duty' (Ente Nazionale per la Cellulosa e per la Carta), the words 'ENCC Duty imposed on the value of the products described above coming from the Federal Republic of Germany', the Pretore referred these questions considering that the matter involved a financial charge levied on packaging coming from a Member State on its importation into Italy.

3 The Pretore considered it necessary in particular to have replies to the questions whether the duty in dispute was to be considered as a charge having an effect equivalent to customs duties within the meaning of Article 13 (2) of the Treaty; whether the prohibition on the grant of aid, laid down by Article 92 (1) of the Treaty, was to be considered as being directly applicable; whether the collection of special duties on products imported from other Member States was capable of constituting a measure having an effect equivalent to a quantitative restriction on importation, prohibited by Article 30 of the Treaty; and, finally, whether the utilization of resources coming from a duty imposed on the import of products from other Member States to finance the activities of an agency governed by public law could constitute an infringement of Article 86 of the Treaty.

having general application provided for by Article 94 or by decisions in particular cases envisaged by Article 93 (2).

As to the third question

7 It is asked whether the collection of a financial charge on the basis of a percentage calculated by reference to the value of the product imported from other Member States constitutes an infringement of Article 13 (2) of the Treaty or any other rule of the Treaty prohibiting the application of special taxation on imports coming from other Member States.

8 In the absence of accurate information relating to the objectives, nature and methods of collection of the duty in dispute, it must be stated that, in exercise of the powers conferred by Article 177, the Court, having to limit itself to giving an interpretation of the provisions of Community law in question, cannot consider legal acts and provisions of national law, the risk being that the reply will correspond only imperfectly to the circumstances of the case.

9 Article 13 (1) provides that customs duties on imports applying between Member States at the date of the entry into force of the Treaty, shall be progressively abolished during the transitional period in accordance with Articles 14 and 15.

Articles 14 and 15 contain the provisions necessary to this end, so that by the end of the transitional period all customs duties on imports between Member States will have disappeared.

12 It is aimed at any tax demanded at the time of or by reason of importation and which, being imposed specifically on an imported product to the exclusion of the similar domestic product, results in the same restrictive consequences on the free movement of goods as a customs duty by altering the cost price of that product.

Even pecuniary charges intended to finance the activities of an agency governed by public law can constitute taxes having equivalent effect within the meaning of Article 13 (2) of the Treaty.

On the other hand, financial charges within a general system of internal taxation applying systematically to domestic and imported products according to the same criteria are not to be considered as charges having equivalent effect.

13 In the interpretation of the concept 'charge having an effect equivalent to a customs duty on imports', the destination of the financial charges levied must be taken into account.

In effect, when such a financial charge or duty is intended exclusively to support activities which specifically profit taxed domestic products, it can follow that the general duty levied according to the same criteria on the imported product and the domestic product nevertheless constitutes for the former a net supplementary tax burden, whilst for the latter it constitutes in reality a set-off against benefits or aids previously received.

14 Consequently, a duty within the general system of internal taxation applying systematically to domestic and imported products according to the same criteria, can nevertheless constitute a charge having an effect equivalent to customs duty on imports, when such contribution is intended exclusively to support activities which specifically benefit the taxed domestic product.

Upon reading the pleadings; Upon hearing the report af the Judge-Rapporteur; Upon hearing the submissions of the plaintiff in the main action, the Government of the Italian Republic and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 13, 14, 15, 92, 93 and 94; 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 Pretore de Conegliano, by order of that court dated 20 November 1972, hereby rules:

A duty falling within a general system of internal taxation applying systematically to national and imported products according to the same criteria can nevertheless constitute a charge having an effect equivalent

CAPOLONGO v MAYA

to a customs duty on imports, when such duty is intended exclusively to support activities which specifically benefit the taxed domestic product.

DELIVERED ON 7 MAY 1973 1

Mr President, research in the fields of forestry and Members of the Court, paper as well as the grant of aid in afforestation. The activities of the ENCC

By law dated 13 June 1935, there was are financed by a government charge. founded in Italy the Ente Nazionale per This is levied pursuant to a law of 13 la Cellulosa e per la Carta (abbreviated June 1940 and a law of 28 March 1956 to: ENCC). This is a Corporation under — disregarding some exceptions of no public law consisting of producers of interest for the present purpose — on paper and cellulose as well as cellulose paper and cardboard arising undertakings using cellulose, and it has from national production and the legal status. Its objects might in essence importation of such products. It is be described as: promoting the specifically provided that the producers development of cellulose production in and importers are entitled to obtain a Italy, facilitating the production and use contribution of part of this levy from of national raw materials for the their customers.

production of cellulose; organizing the This situation is likewise of importance production and sale of paper. As means to the plaintiff in the national of achieving these objects there exist: the proceedings. He acquired from the grant of subsidies to the national press, defendants a quantity of eggs which the grant of subsidies for the export of were delivered in packing material newsprint to third countries, the (cardboard and boxes) that had been purchase of paper in foreign countries, imported from the Federal Republic of