C-124/73

JUDGMENT OF THE COURT OF 5 DECEMBER 1973 1

E. Kampffmeyer v Einfuhr- und Vorratsstelle für Getreide und Futtermittel

(preliminary ruling requested by the Hessisches Finanzgericht)

'Turnover equalization tax'

Case 124/73

Summary

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

1 — Language of the Case: German.

JUDGMENT OF 5. 12. 1973 — CASE 124/73

on the interpretation of the provisions of Article 14 of Regulation No 19 of the Council of 4 April 1962 (OJ 1962, No 30) taken together with those of Article 7 of Regulation No 55 of the Council of 30 June 1962 (OJ 1962, No 54), relating to the set-off of the turnover equalization tax and of costs involved in eosination for the purposes of calculating the levy applicable to products processed from cereals,

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,

KAMPFFMEYER v EINFUHR- UND VORRATSSTELLE GETREIDE

March 1973, filed at the Registry of the open the oral procedure without any Court on 17 April 1973, to suspend the preparatory inquiry. proceedings and to refer the following The parties to the main action and the questions to the Court pursuant to Commission of the European Communi­ Article 177 of the EEC Treaty: ties made their oral observations at the

'1. Is Article 14 (1) (A) (b) of Regulation hearing on 3 October 1973. No 19 of the Council of the The Advocate-General delivered his European Economic Community of 4 opinion at the hearing on 7 November April 1962 on the gradual 1973. establishment of a common organization of the market in cereals (Official Journal of the European II — Observations submit­ Communities, p. 933), in conjunction ted under Article 20 of with Article 7 (2) of Regulation No the Protocol on the 55 of the Council of the European Statute of the Court of Economic Community of 30 June Justice 1962 on the system for products processed from cereals (Official The observations submitted under Journal of the European Communi­ Article 20 of the Protocol on the Statute ties, p. 1583), to be interpreted in of the Court of Justice may be such a way that from the levy for summarized as follows: denatured tapioca flour under No 11.06 of the Common Customs A — Observations submitted by Firma Tariff, the amount of the turnover E. Kampffmeyer equalization tax levied on imports of denatured tapioca flour and the costs 1. As regards the inclusion in the of eosination are to be deducted? calculation of the turnover equalization If so: tax, Firma E. Kampffmeyer first sets out 2. Under what provisions, in what form the conclusions which it believes may be and in what amount would the drawn from the case law of the Court on

JUDGMENT OF 5. 12. 1973 — CASE 124/73

of Regulation No 19/62 with regard to However, in the absence of any processed products and which intro­ indication to the contrary, and bearing duced a levy based on the same in mind the close parallels between the principles and with the same objectives two Regulations, it is justifiable to as those laid down for the levy suppose that Regulation No 55/62 was introduced by Regulation No 19/62. drafted on the basis of the same

criteria, which, therefore, should be sale price, including transport costs, is sufficient to achieve the desired identical with the purchase price paid at alignment of prices. the wholesale stage for cereals. This price includes all costs and taxation to In order to enable Regulation No 55/62 which barley for fodder is subject, as to pursue its objective, which was to well as all the marketing costs incurred impose a levy on denatured tapioca flour up to the wholesale stage. Accordingly, only where the latter could be for the period under consideration, this considered to be in competition with price would also include the turnover barley for fodder and where the levy was tax levied directly or indirectly on strictly necessary for the protection of home-grown barley for fodder. This national or Community producers of being the case, the amount of the levy barley for fodder, the Council's calculated for tapioca flour which had evaluation should have been made on undergone eosination also included all the basis of an identical criterion for all marketing costs and taxation incurred by the Member States. In other words, the the home-grown product with which it Council's evaluation could not attain its was in competition. In order that the objective, which was to impose levies equalization tax levied on imports into that were neither excessive nor the Federal Republic of Germany should inadequate, unless it equalized prices at a not have the effect of a further levy it given stage of the marketing process. was accordingly necessary once more to Without this proviso, the evaluation reduce the amount of the levy, first would necessarily have been arbitrary. established by calculation, by the Accordingly the only relevant question is amount of the equalization tax, that of determining the stage of the computed at a flat-rate if necessary. internal marketing process which is to However, the present state of German form the basis of this evaluation, or legislation would not enable the which those concerned can and must computation of the amount of tax to be consider as such. Unlike Regulation No deducted from the levy to be made at a 19/62, Regulation No 55/62 contains no flat-rate. Kampffmeyer concludes its express provisions on this point. observations on this point by submitting

that the question referred should be tax, the Federal Republic of Germany answered as follows: sets out the objectives of the levy introduced by Regulation No 19/62 and 'Articles 14 of Regulation No 19/62 and states that the economic machinery for 7 of Regulation No 55/62, which are relevant to the calculation of the the stabilization of prices was not calculated in the same way for all the amounts of the levies on products used products which are governed by this in the processing industry (Article 1 (d)

In appropriate flat-rate evaluation. fact, it had not been possible to calculate The provisions enacted up to the present the levy for processed products on the time by the Federal Republic of basis of the same criteria as for the basic Germany have not resulted in a products in view of the absence of a sufficient reduction of the levies.' clearly defined market, with representa 2. As regards the inclusion in the tive prices and qualities which would calculation of costs of eosination, allow comparisons to be made between Kampffmeyer notes firstly that the above the various prices to be taken into comments are substantially relevant to consideration for the fixing of the levy. this final question. In the company's The levy to be applied to processed view, it cannot be objected that the products was made up of two setting off of the costs of eosination components, one 'fixed' — which in the against the levy is incompatible with the case of denatured tapioca flour was almost zero — and the other 'variable'. general character of the levy system. Tapioca flour which has undergone Pursuant to Article 7 (1) and (2) of eosination is a specific product, which is Regulation No 55/62 the variable systematically subjected to this component of the levy for 100 kg of

It could only have been amended in the circumstances set B — Observations submitted by the Federal Republic of Germany out at Article 7 (2) (2) of Regulation No 55/62.

be taken into account in calculating the instituted by Regulation No 19/62, levy to be applied to the product at provided in particular for the raising of a issue. levy on the import of barley and tapioca Taking the case law of the Court as a flour into the Member States. The levy starting point, the Federal Republic to be applied to tapioca flour produced notes firstly that the equalization tax is outside the Community which is covered not a charge having an effect equivalent by the term 'processed products' in to a customs duty and is not illegal from Article 1 (d) and in the Annex to the point of view of the Treaty. Regulation No 19/62 was not calculated, Furthermore it does not appear from the as was the case for barley, according to Judgment of the Court in Case 76/70 Articles 10 and 4 of the said Regulation, that the equalization tax must 'also' be but according to Article 14. This levy taken into account in calculating the levy was made up of two components, one to be applied to the processed products 'variable' (see in particular Article 14 (1) listed in the Annex to Regulation No (A) (b)) and the other 'fixed' (Article 14 19/62. In this Judgment the Court in fact (1) (B)). It was for the Member States to restricted itself to an interpretation of calculate these components and the levy Article 4 of the above Regulation. This to be applied in each case, and they had to conform to criteria set out in provision was solely concerned with the fixing of the threshold price for the basic Regulation No 55/62 in respect of products mentioned therein, and laid products processed from cereals, in down no rule for the calculation of the particular those contained in Articles 2, levy to be applied to the processed 3, 4 and 7. Neither these provisions nor products mentioned in the Annex above other provisions of Regulation No 19 referred to. nor of other legislation adopted for its implementation either directly or 2. As regards the inclusion in the indirectly required or authorized the calculation of the costs of eosination, the Member States to include in the levy, or Federal Republic of Germany is of the to deduct from it, the turnover opinion that since Article 7 (2) and (3) equalization tax levied on imports of (b) of Regulation No 55/62 fixed levies tapioca flour on the basis of the dutiable which are very much lower than those value of the various imports. Of course applicable to non-denatured tapioca the Member States were empowered to flour, the costs of eosination or other fix for example the threshold prices from methods of denaturing have already which the levy was calculated, but it was been taken into account. They could not not possible for them to deviate from the accordingly be taken into account a rules laid down for this calculation by a second time for the fixing of the levy to Regulation which was binding on them be applied. under Article 189 of the Treaty. The Finally, the Federal Republic submits that wording of the provisions of Regulation No 55/62 left the Member States no since the answer to be given to the first question is in the negative the second room for the exercise of their own

intended in principle to compensate tapioca flour. The Regulation did not completely the difference between world provide that further account should be market prices and guaranteed home taken of these costs; indeed, it was not prices. It ought to have raised the world necessary to do so. Moreover in this price for imported cereals within the case, as well as in that of the importing Member State to the level of equalization tax, to find in favour of the the target price, but not above it. It was applicant would be to depart from the thereby intended, on the one hand, that levy system and jeopardize the general imported cereals could not be sold at method of calculation in favour of a prices below the target price on the particular case and without the least relevant internal market, and, on the justification. Furthermore, to reduce the other hand, that internal prices should levy by the amount of the costs incurred be protected against fluctuations in by the importer in a Member State for world prices and stabilized at the level of the purposes of total or partial the basic target price. denaturing of the imported product However, as regards the other basic would amount to the grant of a cereals within the meaning of Article 1 denaturing premium, which could in no of Regulation No 19, produced within respect be represented as being in the the Community but not listed at Article public interest within the Community. 4 of that Regulation and being in general Accordingly, in view of the fundamental of lesser economic importance within the difference between the objective and the Member States, such a thorough-going structure of the levy raised on tapioca price guarantee was not necessary, nor flour by comparison with the levy on was it envisaged. Equally, such a those cereals listed at Article 4 of guarantee was not necessary with regard Regulation No 19/62, Article 7 of to products processed from cereals listed Regulation No 55/62 cannot be at Article 1 (d) and in the Annex to interpreted as requiring the deduction of Regulation No 19, in particular manioc the equalization tax or of the costs of flour (tapioca flour) which is not grown eosination incurred individually by the anywhere in the Community. However, importer. The inclusion in the although it was also necessary here to calculation of costs paid individually raise the import price by means of levies, could only be an exceptional solution in order to avoid competition based on and could therefore only be justified, prices from substitute products in even on the grounds of fairness, if it was relation to the main national products, firmly based in substantive law. Such a there was no reason, in particular for tapioca flour, why home sales prices basis does not exist in Community law, should not have been raised above a nor can it be deduced from the

2 The first question asks whether the provisions of Article 14 (1) (A) (b) of Regulation No 19/62 in conjunction with those of Article 7 (2) of Regulation No 55/62 are to be interpreted in such a way that from the levy for 'denatured tapioca flour' (Tapiokamehl) under No 11.06 of the Common Customs Tariff, the amount of the turnover equalization tax levied on imports of denatured tapioca flour and the costs of eosination are to be deducted.

In the event of this question being answered in the affirmative, the Court is requested to state under what provisions, in what form and in what amount the turnover equalization tax taken into account in determining the threshold price for barley would then have to be brought into the calculation, when the levy for 'denatured tapioca flour', under Article 7 (2) of Regulation No 55/62, has been calculated on the basis of the threshold price for barley.

3 These questions are concerned with the calculation of the levy to be applied to 'denatured tapioca flour', covered by the term 'processed products' in Article 1 (d) and in the Annex to Regulation No 19/62.

This levy, calculated pursuant to Article 14 of the said Regulation, was made up of two components, one variable, the other fixed.

As regards processed products which do not contain the basic products listed in Article 1 (a), the variable component of the levy was fixed, pursuant to Article 14 (1) (A) (b), taking account of market conditions for processed products manufactured from the above-mentioned basic products and which are most similar thereto.

KAMPFFMEYER v EINFUHR- UND VORRATSSTELLE GETREIDE

Such a deduction would alter the rate of the fixed and variable components of the levy, as directly or indirectly calculated by Regulation No 55/62.

Furthermore, as regards the inclusion in the calculation of the costs of eosination, Article 7 (2) and (3) (b) of Regulation No 55/62 provided for a levy on 'denatured tapioca flour' different from that fixed by paragraphs (1) and (3) (a) of the same Article for the same processed products which had not undergone a denaturing process.

The outcome of these Regulations is that the levy system established by Article 7 already took account of differences which exist in the processed product as regards quality and subsequent use, whether the product had undergone a denaturing process or not.

Therefore the costs of eosination could not be set off against the levy to be applied pursuant to Article 7 (2) and (3) (b) of Regulation No 55/62.

JUDGMENT OF 5. 12. 1973 — CASE 124/73

5 Accordingly the first question should be answered to the effect that the provisions of Article 14 (1) (A) (b) of Regulation No 19/62 read in conjunction with those of Article 7 (2) of Regulation No 55/62, are to be interpreted as meaning that neither the amount of the turnover equalization tax levied on import nor the costs of eosination are to be deducted from the levy applicable to 'denatured tapioca flour', under Common Customs Tariff heading No 11.06.

in answer to the question referred to it by the Hessisches Finanzgericht by order of that court dated 27 March 1973, hereby rules:

KAMPFFMEYER v EINFUHR- UND VORRATSSTELLE GETREIDE

The provisions of Article 14 (1) (A) (b) of Regulation No 19 of the Council of the EEC of 4 April 1962 read in conjunction with those of Article 7 (2) of Regulation No 55 of the Council of the EEC of 30 June 1962 are to be interpreted as meaning that neither the amount of the turnover equalization tax levied on import nor the costs of eosination are to be deducted from the levy applicable to 'denatured tapioca flour', under Common Customs Tariff heading No 11.06.

Lecourt Donner Sørensen Monaco Mertens de Wilmars

Pescatore Kutscher Ó Dalaigh Mackenzie Stuart

Delivered in open court in Luxembourg on 5 December 1973.