C-125/73

JUDGMENT OF THE COURT OF 5 DECEMBER 1973 1

Neufeld & Co.

v Hauptzollamt Hamburg-Waltershof (preliminary ruling requested by the Finanzgericht Hamburg)

'Turnover equalization tax'

Case 125/73

Summary

HAUPTZOLLAMT HAMBURG-WALTERSHOF,

on the interpretation of the provisions of Article 14 of Regulation No 19 of the Council dated 4 April 1962 (OJ 1962, No 30) in conjunction with Article 7

1 — Language of the Case: German.

JUDGMENT OF 5. 12. 1973 — CASE 125/73

of Regulation No 55 of the Council dated 30 June 1962 (OJ 1962, No 54), regarding the taking into account of turnover equalization tax and costs inherent in denaturing for the purposes of the levy on processed cereal products,

THE COURT

NEUFELD v HAUPTZOLLAMT HAMBURG-WALTERSHOF

The calculation of these components and 'Must Article 14 of Regulation No 19/62 of the levy to be applied had to be made (1) and Article 7 of Regulation No according to the criteria laid down in 55/62, which are material for the Regulation No 55. calculation of the amounts of the levy for processed products, (Article 1 (d) in 2. In its judgment dated 12 May 1971 conjunction with the Annex to in Case 76/70 Wünsche v Hauptzollamt Regulation No 19/62), be interpreted, Ludivigshafen, (Rec. 1971, p. 393), the having regard to the judgment of the Court ruled that in calculating the tresh­ European Court in Case 76/70 of 12 old price of the cereals mentioned in May 1971, whereby in the calculation of Article 4 of the Regulation, the basic the threshold price for cereals under target price must be reduced, inter alia, Article 4 of Regulation No 19/62 a fixed by a fixed sum corresponding to the sum corresponding to the effect of the effect of the internal taxes levied on internal taxes levied on import — such import, such as turnover equalization tax. as turnover equalization tax — is to be

JUDGMENT OF 5. 12. 1973 — CASE 125/73

Commission of the European Communi the importer. This interpretation, it is ties, represented by its legal adivser Peter said, is consistent with the scheme of Kalbe, submitted written observations in Regulation No 19/62. It is likewise accordance with the provisions of Article consistent with that of Regulation No 20 of the Protocol on the Statute of the 55/62, this latter being only a measure Court of Justice. applying Regulation No 19/62 to After hearing the report of the processed products and imposing a levy Judge-Rapporteur and the opinion of the based on the same principles and the Advocate-General the Court decided to same objectives as those of the levy proced without a preparatory inquiry. provided for by Regulation No 19/62. The oral observations of the parties to It appears moreover from Article 7 (2) of the main action and the Commission Regulation No 55/62, as well as from were made at the hearing on 3 October the fourth recital of the reasons on 1973. which it is based, that the legislature The Advocate-General delivered his regarded 'denatured tapioca flour' as a opinion at the hearing on 7 November product competing with barley fodder 1973. and which therefore necessarily had to reach the national market at a corresponding price — taking into account the different starch content and II—-Observations submit other differences of quality determining ted under Article 20 of its use — at the guide price for barley.

76/70. It appears in its opinion from this made on the basis of identical criteria for judgment that the German equalization all the Member States. tax was of a prohibited nature as a In other words, the Council's assessment charge having an effect equivalent to a could attain its objective, which is to

impose neither excessive nor inadequate Federal Republic of Germany from levies, only if it tended to equalize prices having the effect of an additional levy, it at a defined economic stage. In the was thus necessary to reduce again the absence of such a condition this amount of the levy first fixed by assessment would necessarily have been calculation by the amount of the arbitrary. equalization tax, calculated, where The only question which arises, then, is appropriate, at a flat rate. to determine the internal economic stage In the present state of the German serving as a basis for this assessment; or legislation, however, it would not be which the subjects could and should possible to calculate at a flat rate the regard as a basis for this assessment. amount of the tax to be deducted from Contrary to Regulation No 19/62, the levy. The plaintiff concludes by Regulation No 55/62 contains no proposing that the question should be express provisions on this point. But in answered as follows: the absence of contrary indications, and taking into account the relationship 'The combined provisions of Article 14 between the two Regulations, it is of Regulation No 19/62 and Article 7, proper to proceed from the assumption regarding the fixing of the levy that Regulation No 55/62 envisages the applicable to processed products referred same economic stage as that to in Article 1 (d) of Regulation No contemplated by Regulation No 19/62. 19/62 and its Annex, must be interpreted In this case it follows that the Council as meaning that the national judge is has been able to proceed to the entitled to deduct from the amount of assessment only with a view to adapting the levy that of the turnover equalization the price of the product in dispute to the tax, where appropriate, insofar as the stage of purchase in the wholesale trade national legislature has not provided for in barley fodder, taking into account the a general deduction based on an differences in quality and destination. It appropriate flat rate calculation. is indeed by reference to the wholesale The measures taken so far by the Federal stage that Regulation No 19/62 as well Republic of Germany have not involved as Regulations Nos 13/64 and 14/64 had a sufficient reduction in the levies.' fixed the threshold price of the products

As charges imposed on the competing regards processed products, indeed, the national product. To prevent the levy could not have been calculated equalization tax levied on imports in the according to the same criteria as for

basic products because of the absence of basic products which are mentioned a transparent market with representative therein and did not provide any rule for prices and qualities permitting compari­ the calculation of the levy applicable to son of the various prices to be taken into processed products dealt with in the consideration in fixing the levy. The levy Annex. applicable to processed products has two components, one fixed — which as regards denatured tapioca flour was C — Observations submitted by the almost equal to zero — and the other Commission variable. In accordance with Article 7 (1) and (2) of Regulation No 55/62 the According to the Commission it is variable component of the levy for 100 necessary to distinguish between the kg of denatured tapioca flour was equal pricing system relating to the products to the levy applicable to 40 kg of barley. referred to in Article 4 of Regulation No According to this method of calculation 19/62 and that relating to other cereals. the marketing costs, including the As regards these latter Regulation No equalization tax, could only have been 19/62 did not provide a guarantee of taken into account to the extent that fixed internal prices based on a common they had already been taken into pricing system. If nevertheless a levy account in the calculation of the levy were payable on imports of these kinds applicable to the basic product which of cereals, it would be because these had served as a basis for fixing the cereals can be used in place of those variable component. The amount of the which are mentioned in Article 4 of levy was, indeed, exactly fixed, since the Regulation No 19/62, the sale of which, amount of the variable component had as well as the guarantee of the price been calculated by reference to the levy given for the same article, would be for the product most similar to the compromised if the import of substitute processed product. It would have been cereals at too cheap a price had made possible to modifiy it only in the possible competition by substitutes. The circumstances set out in Article 7 (2) of system of levies thus had to remove the Regulation No 55/62. difference between the level of prices of It follows from such a system of imported cereals and that of cereals calculation that the equalization tax referred to in Article 4 of Regulation No could not therefore have been taken into 19.

It follows that the levy applied to It was not necessary to take the costs of tapioca flour could not aim to equalize denaturing any more fully into account. internal and external prices. Its sole As regards imported goods which were objective was to prevent the offer price already denatured it would have been of tapioca flour on the national markets absurd to deduct once again the costs of of the Member States from departing denaturing from the levy already from that of cereals or products based reduced to take into account this on protected cereals to such an extent denaturing. As regards goods imported that the structure of their market prices intact, the deduction of costs of was seriously disturbed. Article 14 of denaturing incurred after import would Regulation No 19/62 and Article 7 of likewise have been illogical: in view of Regulation No 55/62 reflect this the fact that the users of imported position. tapioca flour were free to do what they The Commission concludes that the wanted with these goods, the amount of the levy would have had to be fixed with principles of Judgment 76/70 do not regard to the nature of the domestic apply to the case in question: there was product which, in view of the multiple no imperative reason for taking into possibilities of use of non-denatured account the turnover equalization tax in tapioca flour, had to be protected in fixing the levy, since the basis for such priority. an operation, i.e. a fixed target price, Moreover, to accede to the plaintiff's was lacking. As regards the deduction of claim to have the various costs taken the costs of denaturing incurred in into account which it has had to bear in colouring the imported tapioca flour certain particular cases would undermine with eosin, the Commission observes the generic method of calculation usually that the system of levies of Article 7 of applied in the common agricultural Regulation No 55/62 has already rules. Finally, to take into account the sufficiently taken into account the costs of denaturing incurred after import different possibilities of use and the would be equivalent to granting a relative value of denatured and Community denaturing premium not non-denatured tapioca flour. Indeed, having any character of public utility in Article 7 of Regulation No 55/62 the Community. provided for two distinct systems of According to the Commission the reply levies: on the one hand for denatured should be given that under Regulation tapioca flour based on the levy No 19 the levy applicable to denatured applicable to barley, on the other hand tapioca flour does not have to be for non-denatured tapioca flour based reduced by the turnover equalization tax on the levy applicable to maize starch. payable on import.

This levy, calculated under Article 14 of the said Regulation, is composed of two components, the one variable and the other fixed.

As regards processed products not containing the basic products referred to in Article 1 (a), the variable component of the levy was fixed in accordance with Article 14 (1) (A) (b), after taking account of the conditions of the markets in products processed from the abovementioned basic products which most resemble them.

For this purpose Article 7 (1) provides, in accordance with the provisions of Article 2 (4), that for the processed products referred to in the Annex to Regulation No 19/62 under heading 11.06 of the Common Customs Tariff, including 'tapioca flour', the variable component applicable to 100 kilogrammes of processed product is equal to the variable component referred to in Article 9 applicable to 100 kilogrammes of maize starch.

According to the said Article 9 the variable component applicable to 100 kilogrammes of maize starch is equal to the levy applicable to 161 kilogrammes of maize.

Moreover, Article 7 (3) (a) determined the fixed component of the levy applicable to the product in question at 1.70 units of account.

3 It appears from these provisions that, contrary to the system instituted by Article 10 (2) of Regulation No 19/62, where the levy may vary according to

5 The costs incurred by the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable, and as these proceedings are, insofar as the parties to the main action are concerned, a step in the action pending before a national court, the decision on costs is a matter for that court.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the 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 Community, especially Articles 40 and 177; Having regard to Regulation No 19 of the Council of the EEC of 4 April 1962; Having regard to Regulation No 55 of the Council of the EEC of 30 June 1962;

OPINION OF MR WARNER — CASE 125/73

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

Registrar President

OPINION OF MR ADVOCATE-GENERAL WARNER

(see Case 119/73, p. 1381)