C-119/73

JUDGMENT OF THE COURT OF 5 DECEMBER 1973 1

Deutsche Getreide- und Futtermittel-Handelsgesellschaft v Einfuhr- und Vorratsstelle fur Getreide und Futtermittel

(preliminary ruling requested by the Hessisches Finanzgericht)

'Turnover equalization tax'

Case 119/73

Summary

FIRMA DEUTSCHE GETREIDE- UND FUTTERMITTEL-HANDELSGESELLSCHAFT, Ham­ burg, and

EINFUHR- UND VORRATSSTELLE FÜR GETREIDE UND FUTTERMITTEL, Frankfurt/ Main,

on the interpretation of Articles 8 and 11 of Regulation No 19 of the Council of 4 April 1962 (OJ 1962, No 30), concerning the calculation of the levy for wheat and the fixing of the threshold price for maize in Member States in which there is no significant production of that cereal,

THE COURT

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

Advocate-General: J. P. "Warner Registrar: A. Van Houtte

of the Court of Justice of 12 May there is no significant production was 1971 in the Wünsche case (Case to be fixed in such a way that it 76/70, Rec. 1971, p. 393). This is the corresponded to the threshold price purport of Article 8 (1) of Regulation for barley, or was there a certain No 19/62, according to which the latitude of valuation for particular threshold price in Memer States in types of cereals according to their which there is no significant value as fodder, etc.?' production of this cereal should have 2. By decision of 14 August 1973, the been fixed so as to correspond to the Bundesfinanzhof rejected as unfounded threshold price for barley. an appeal brought by Deutsche Getreide For its part, the EVstG is of the opinion: against the order of 21 March 1973 of the Hessisches Finanzgericht referring — that the fixing of the threshold price the case for a preliminary ruling. for durum wheat derives from the Firma Deutsche Getreide, represented by discretionary power of the Member Fritz Modest, of the Hamburg Bar, the States, and that it was merely Federal Republic of Germany, represen­ incumbent upon the latter not to fix ted by Christof von Arnim, and the the levy below a minimum rate (5 % Commission of the European Communi­ above the threshold price for ties, represented by its Legal Adviser common wheat); Peter Kalbe, submitted written observa­ — that, as concerns Article 8 (1) of tions in accordance with Article 20 of the Regulation No 19/62, the interpreta­ Protocol on the Statute of the Court of tion put forward by Deutsche Justice. Getreide cannot be accepted, since it After hearing the report of the does not take account of the differing Judge-Rapporteur and the opinion of the values of the various varieties of Advocate-General, the Court decided to cereal. open the oral procedure without any preparatory inquiry. The Hessisches Finanzgericht, before The parties to the main action and the which the action was brought, being of Commission of the European Communi­ the opinion that the latter raised a ties made their oral observations at the problem of interpretation of Community hearing on 3 October 1973. law, decided, by order of 21 March The Advocate-General delivered his 1973, lodged at the Registry of the Court of Justice on 12 April 1973, to suspend opinion at the hearing on 7 November 1973. judgment and to refer the following questions to the Court pursuant to II — Observations submit­ Article 177 of the EEC Treaty: ted under Article 20 of '1. Is Article 11 of Regulation No 19/62 the Protocol on the Sta­ of the Council of the European tute of the Court of Economic Community (Official Justice Journal of the European Communi­ ties No 933/62) to be interpreted in The observations submitted under such a way that in the calculation of Article 20 of the Protocol on the Statute the levy on durum wheat the of the Court may be summarized as turnover equalization tax payable on follows: imports should have been taken into account, or was this not required? A — Observations submitted by Deutsche Getreide- und Futtermit­ 2. Is Article 8 (1) of Regulation No tel-Handelsgesellschaft 19/62 EEC to be interpreted in such a way that the threshold price for Firstly, Deutsche Getreide points to maize in Member States in which certain individual features of the market

in durum wheat, which, although a wheat harvested within the Community. special market, is closely aligned with This was the precise objective of Article the market in common wheat. For 11 (4). climatic reasons, durum wheat can be Having examined the way in which the cultivated within the Community only in Federal Republic of Germany took France and in Italy. By reason of the account of the provisions of Articles 5, 7, risks and expense which it involves, the 8 and 11 of Regulation No 19/62, cultivation of durum wheat in iarge concerning the fixing of basic target quantities is only possible with the help prices, basic intervention prices and of financial aid. Even before the coming threshold prices both for common wheat into force of the definitive rules with and for durum wheat, Deutsche Getreide regard to the market in cereals in 1967 defines its position with regard to the (Regulation No 120/67), Italy and two questions referred. France had given financial aid to As to the first question, Deutsche producers, but is was only from 1967 Getreide refers to the case law of the onwards that the cultivation of this cereal Court, especially to its Judgment in Case underwent a sudden development within 76/70, regarding Articles 4 and 5 of these States, due to the grant of more Regulation No 19/62.

Although it is true that the twofold purpose in protecting producers objectives of Article 39 cannot all be of both types of wheat. On the one hand attained at once, the Community it was to guarantee producers of durum institutions should nevertheless consider wheat within the Member States a one in terms of the others. According to market for their produce at a fair price; the principle of Community preference on the other hand it served to obviate the interests of consumers should give the circumstance whereby common way to the extent necessary to guarantee wheat mills within the Community a fair standard of living for the process durum wheat instead of agricultural community.

DEUTSCHE GETREIDE v EINFUHR- UND VORRATSSTELLE GETREIDE

11 (4) of Regulation No 19/62 a scope applied, as well as in the place where which is in conformity with the Treaty. they are or should be applied. If these On the one hand a limitation of the parities are not taken into account and power granted by this provision can be are not harmonized prices cannot be deduced from the protective function of aligned: either the levy would be too the threshold price. In the Member low and would therefore lose its States which do not produce durum protective function or it would be too wheat this power could be limited by high and would have the effect of reference to the basic target price for inhibiting imports. common wheat, so that the threshold Regulation No 19/62, at Articles 4 and 5 price for durum wheat — in the same (as well as the Judgment of the Court way as that for common wheat — mentioned above), took this factor into would have to be fixed on the basis of account in fixing the threshold prices for the basic target price for home grown common wheat, barley, maize and rye. common wheat.

This would imply that the threshold prices could never be fixed at Regulation No 19/62 the institutions of the Communities undertook not to allow such a high level that they would lose the objectives of Article 39 to be their function of aligning prices and adversely affected by fixing a would have a prohibitive effect. In these prohibitively high figure for the cases too, the equalization tax would be threshold price. This undertaking led to a necessary cost factor for the the prohibitions contained in Articles 18 calculation of the threshold price. (1) and 20 (1) of that Regulation, which According to either hypothesis this tax were addressed to the Member States, ought to have been taken into account in requiring that they should no longer levy calculating the threshold price for durum customs duties and charges having wheat.

Finally, Deutsche Getreide suggests the significant difference existed between the following answer to the first question: value of these two varieties as fodder which, moreover, is in fact the case. 'Article 11 (4) of Regulation No 19 of Finally, having recalled that the contrary the Council of the European Community on the gradual establishment of a hypothesis is also contradicted by the common organization of the market in fact that as from the beginning of the 1963/1964 marketing season the Federal cereals of 4 April 1962 (OJ 1962, p. 933) Republic of Germany has always fixed is to be interpreted as meaning that, for the threshold price for barley and for the calculation of the threshold price for maize at the same level, Deutsche durum wheat, the inevitable costs of marketing which affect the said cereal Getreide proposes the following answer from the moment of its import up to the to the second question: wholesale buying stage must be taken 'Article 8 (1) of Regulation No 19/62 into account, and that therefore, inter should be interpreted as meaning that alia, a fixed amount equivalent to the the threshold prices for maize in total of internal import charges, such as Member States in which there is no the turnover equalization tax, must be significant production of this cereal deducted from the threshold price.' should be fixed at the same level as that As to the second question, Deutsche for barley, on condition that the Getreide observes that although the inevitable marketing costs to be taken wording of Article 8 (1) of Regulation into consideration for the calculation of No 19/62 differs from that of Article 4 the threshold price are equal.

barley. Indeed, if the marketing costs are price level. It was not calculated in the identical, the threshold prices are also same way for all products coming under equal. Regulation No 19 and, even for the No other interpretation of Article 8 (1) is calculation of the levy to be applied to possible. In particular this provision basic products, there were differences. does not allow the threshold prices for The common factor uniting these maize and for barley to be differentiated products was the fact that the levy was according to the different value of these equal to the difference between the f.a.f. two varieties of cereal as fodder. In or c.i.f. prices and the threshold price, adopting this Regulation the Community which it was for the Member States to proceeded on the principle that no ascertain. Moreover, different rules were

in force as to the calculation of whereas the problem at issue here threshold prices. concerns Article 11 (4) of that For common wheat and barley, and, in Regulation. certain Member States, for maize and Finally, the Federal Republic proposes in rye, the threshold price had to be fixed answer to the first question that 'the in conformity with the conditions laid turnover equalization tax should not be down at Article 4 of Regulation No included in the calculation of the levy to 19/62, so that at the marketing centre of be applied to durum wheat'. the area having the greatest deficit sale As to the second question, the Federal prices for imported products are equal to Republic notes that the very terms in the basic target price. which Article 8 (1) of Regulation No For durum wheat on the other hand the 19/62 is couched ('so that the level of threshold price was calculated according target prices may be attained') make it to the rule contained in Article 11 (4) of clear that the Member States which had the same Regulation: it had to be fixed to fix the threshold price were not at a level higher that 5 % above that of obliged to fix that price at the same level the threshold price for common wheat. as that of the threshold price for barley. The rule thus laid down by this If such a close parallel between the two provision imposed on the Member States threshold prices had been desired, this a minimum limit designed to take would have been clearly expressed, for account of the quality and properties of example in the following terms: 'in those

To by their starch and albumen content, as have taken account of these costs, if this to the special possibilities they offer for did not allow the threshold price to use in industry, etc.). reach the required minimum limit, would in fact have constituted an Finally, having cited Article 5 (2) of infringement of Community provisions. Regulation No 120/67 — a provision which corresponds to Article 8 (1) of The contrary hypothesis cannot be Regulation No 19/62 — in support of its supported by characterizing the tax in submissions, the Federal Republic question as a charge having effect proposes as an answer to the second equivalent to a customs import duty or question that 'the Member States in by invoking the Judgment of the Court which there is no significant production of Justice in Case 76/70. On the one were not obliged to fix the threshold hand it is clear from the case law of the price for maize at the same level as that Court that the equalization tax is not a of the threshold price for barley'. charge having equivalent effect and that to levy it is not illegal. On the other C — Observations submitted by the hand, Case 76/70 is not relevant here Commission since the Court only gave an interpretation in that Judgment of Approaching the first question, the Article 4 of Regulation No 19/62, Commission notes that whereas in the

case of common wheat the fact that the been taken, at a standard rate, pursuant equalization tax was taken into account to Article 4, of the equalization tax in fixing the threshold price was applicable to this product, but this tax explained by the objectives attributed to has nothing in common with the charge the levy applied to that product, this was levied on the dutiable values of imports not so in the case of durum wheat, since of durum wheat. The fact that the the state of the market for this cereal threshold price for durum wheat was to and the interests involved in the various be fixed at a level at least 5 % higher

stimulated. This being the case, on the application of the uniform Community one hand it was necessary and timely to rules and would thereby have been entrust the Member States with the task illegal. of fixing the desired price level for On the other hand, where there was imported durum wheat. On the other nothing to prevent the Member States hand if, in order to encourage from fixing the threshold price for Community production of durum wheat, durum wheat at a level higher than 5 % it appeared that certain price advantages above that for common wheat, or from had to be granted to Community taking account, in fixing this level, of the producers, it would have been necessary, fact that an equalization tax had also in theory, to raise the internal price of been levied, which had led to a raising of this cereal, which was already high, to a internal offer prices. level above that of common wheat and As to the second question, the thereby fix a higher threshold price for Commission notes that the method of

Regulation No 19. The levy to be These considerations led in fact to Article applied to the basic cereals mentioned at 11 (4), according to which the Member Article 4 was calculated so as to States had to fix the threshold price for guarantee home producers the assur durum wheat at a level at least 5 % ances which they had been given with higher than that for common wheat. regard to sales and prices for these In calculating the level of the threshold cereals on the home market. price for common wheat, which was On the other hand, with regard to the used as a reference, account had already cereals mentioned at Article 8, such an

extensive guarantee was not necessary, useless and untimely in economic terms. nor was it envisaged, in view of their To treat a whole variety of fodder lesser economic importance in the cereals of different values in such a Member States concerned; nor was it uniform way would have distorted the possible to cease the policy of protection market relationships not only between against cheap imports from other these various cereals but also in relation Member States or third countries. In fact to barley. Since it was not possible to these cereals were capable of replacing make a mathematically rigorous and those listed in Article 4 on the home uniform assessment, for all the Member market, because their prices for certain States, of the level to which internal important uses were lower and they offer prices for imported maize should were therefore likely to reduce the be raised so that the price structure for ability of internal prices of these cereals barley should not be disturbed, Article 8 to evolve towards their target prices as (1) entrusted to each Member State the planned. Accordingly, offer prices for task of fixing the internal price level for imported cereals such as those listed in imported maize, with the purpose of Article 8 had to be raised, by means of a protecting the home market in barley levy, to a level which would guarantee and therefore of fixing the threshold normal competitive conditions, without price for maize in relation to that for affecting the evolution of the prices of barley. Since the common organization basic cereals. of markets established by Regulation No 19/62 allowed national markets with That being said, market policy did not their different price levels to continue to however require that these prices be raised above the level which would exist side by side, it was perfectly logical in the context of the system as adopted guarantee this competition. As regards to allow the price level desired by each the practical aspect of fixing the Member State to be fixed at national threshold price it follows from the above level. considerations that the wording of Finally, having pointed to reasons for an Article 8 (1) must not be understood to interpretation confirming the independ­ mean that the price of maize on the ence of the national legislature in this German market should necessarily have field, the Commission submits that been raised to the level of the basic Article 8 (1) 'implies neither an target price for barley. On the con­ obligation to fix the threshold prices for trary, this internal price should have cereals mentioned in the said Article been fixed at such a level that market systematically at the level of the prices for barley could easily have threshold price for barley nor a reached the basic target price for that prohibition upon exceeding this cereal. Moreover a general, overall rise threshold price for certain types of cereal in internal market prices for all varieties when this is required by the of imported fodder cereals mentioned at circumstances, for the protection of Article 8 to the level of the basic target internal barley prices and the attainment price for barley would even have been of the objectives of the levy'.

To this end, this provision states that as regards durum wheat the amount of the levy shall be equal to the difference between the threshold price in the importing Member State and the free-at-frontier price of the product on arrival from another Member State or the c.i.f. price of the product when imported from third countries.

In laying down the criteria to be applied to the fixing of the threshold price for durum wheat the said Article 11 does not reproduce the provisions contained in Article 4, relating to the calculation of the threshold price for imports of common wheat, barley, maize and rye, but provides that the threshold price for durum wheat shall be fixed by the Member States, for an identical standard of quality, at a level not less that 5 % above that for common wheat.

Unlike Article 4, Article 11 (4) provides that the threshold price for durum wheat shall be fixed in relation not only to the level of the target price but also to a minimum differential between the threshold price for that cereal and that for common wheat, below which figure the threshold price for durum wheat may not be fixed.

Although the purport of this rule is that the amount of the levy can vary in view of fluctuations in world prices and of the threshold price, provided that these variations occur above the before-mentioned minimum differential, a decrease in the levy due to account being taken of inevitable marketing costs, such as the turnover equalization tax, is prohibited if this decrease results in the amount of the levy in question no longer corresponding to a threshold price for durum wheat which is at least 5 % higher than that for common wheat.

The phrase 'so that. . . may be attained' shows that the objective of Article 8 (1) is essentially that of ensuring that the threshold price for maize, in Member States in which there is no significant production of that cereal, shall not be fixed at a lower level than that for barley.

Were this not so not only would the stability of prices within the Community be jeopardized, but also the preference established by Regulation No 19/62 for competitive home-grown products.

7 It appears therefore, from the wording and the objectives of Article 8 (1), that the Member States are not permitted to take account of the characteristic qualities of the various kinds of fodder cereals if by so doing they allow the amount of the levy to decrease to such an extent that it no longer corresponds to a threshold price for maize which would allow barley to reach its target price.

8 Accordingly the second question should be answered to the effect that Article 8 (1) of Regulation No 19/62 is to be interpreted as meaning that Member States in which there is no significant production of maize could not, when fixing the threshold price for maize, take account of the characteristics of the different varieties of cereals in question if the fact of taking account of these

JUDGMENT OF 5. 12. 1973 — CASE 119/73

characteristics would have led to a threshold price for maize which would have made it impossible for barley to reach its target price.

1. Article 11 of Regulation No 19 of the Council of the EEC of 4 April 1962 neither requires nor prohibits that a Member State should take account of the turnover equalization tax in calculating the levy applicable to durum wheat, provided that the threshold price for that cereal is maintained at a level at least 5 % above that for common wheat.

2. Article 8 (1) of Regulation No 19 of the Council of the EEC of 4 April 1962 is to be interpreted as meaning that Member States in

DEUTSCHE GETREIDE v EINFUHR- UND VORRATSSTELLE GETREIDE

which there is no significant production of maize could not, when fixing the threshold price for maize, take account of the characteristics of the different varieties of cereals in question if the fact of taking account of these characteristics would have led to a threshold price for maize which would have made it impossible for barley to reach its target price.

Lecourt Donner Sørensen Monaco Mertens de Wilmars

Pescatore Kutscher Ó Dalaigh Mackenzie Stuart