C-126/73

JUDGMENT OF THE COURT OF 5 DECEMBER 1973 1

Friedhelm Busch

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

'Turnover equalization tax'

Case 126/73

Summary

and

HAUPTZOLLAMT HAMBURG-ERICUS,

on the interpretation of Articles 4 and 6 of Regulation No 22 of the Council dated 4 April 1962 (OJ 1962, p. 959), concerning taking into account the turnover equalization tax for the purpose of the levy applicable in the poultry sector and subsidiarily on the validity of EEC Regulations No 91/65 of the

1 — Language of the Case: German.

JUDGMENT OF 5. 12. 1973 — CASE 126/73

Commission dated 29 June 1965 (OJ 1965, p. 1927) and 124/65 of the Com­ mission dated 22 September 1965 (OJ 1965, p. 2587),

I — Facts and procedure 188/69) concerning the charging of turnover equalization tax in the case of The facts and procedure may be levies on cereals. summarized as follows: This claim was rejected by the defendant. The dispute having been 1. In November 1965 the plaintiff brought before the Hamburg Finanzge­ obtained customs clearance of quantities richt, that court decided, by Order dated of slaughtered poultry coming from the 16 March 1973, filed at the Court on 18 United States and falling under tariff April 1973, to stay the proceedings and heading 02.02-A-I-b. The Customs to submit the following questions to the Office levied 33 813·90 DM at the Court, in accordance with Article 177 of standard levy rate of 90·60 DM/100 kg the EEC Treaty, for a preliminary (Regulation No 91/65 of 29 June 1965), ruling: plus 40·60 DM/100 kg as additional levy under Article 6 of Regulation No 22/62 1. Are Articles 4 and 6 of Regulation No (Regulation No 124/65 of 22 September 22/62 of the Council to be interpreted 1965), and finally 2 855·40 DM as so that on the import of slaughtered turnover equalization tax at 4 % of the poultry or poultrymeat from third customs value. countries, the standard levy or additional levy which is made has to The plaintiff requested that the be reduced by a fixed amount which Community levies be reduced by the is equivalent to the turnover whole amount of the turnover, equalization tax levied on import? equalization tax paid on the imports. It referred, inter alia, to the judgment of 2. If Question 1 is answered in the the Court of 12 May 1971 in the case of affirmative, are Regulations Nos Wünsche (Case 76/70, Rec. 1971, p. 393) 91/65 of the Commission of 29 June as well as to two judgments of the 1965 and 124/65 of the Commission Bundesfinanzhof (VII R 91/69 and VII R of 22 September 1965 invalid insofar

as they fix the standard levy and the After hearing the report of the additional levy for poultry under Judge-Rapporteur and the opinion of the tariff heading 02.02? Advocate-General, the Court decided to proceed without a preparatory inquiry. 2. In its order of reference the The oral observations of the parties in Finanzgericht declared, inter alia, that in the main action and the Commission the event of an affirmative reply to the were made at the hearing on 3 October first question the standard or additional 1973. levy should be reduced by the whole of The Advocate-General delivered his the turnover equalization tax in spite of the reduction of the threshold price of opinion at the hearing on 7 November

Justice both of Regulation No 91/65 of 29 June 1965 fixing in particular levies for The observations submitted under slaughtered poultry of tariff heading Article 20 of the Statute of the Court of 02.02 and of Regulation No 124/65 of 22 September 1965 reducing the Justice may be summarized as follows: additional amounts charged on slaughtered chickens on import. The A — Observations submitted by the interpretation of Article 4 of Regulation No 22/62 by the Court in the present plaintiff case would not be concerned, as was the dispute which gave rise to the Wünsche The plaintiff sets out first of all the case, with the validity of rules of conclusions which it considers may be drawn from the case law on the extent national law derived from Community law, but with the validity of Regulations to which turnover equalization tax may of the Commission subsequent to and be taken into account. In its opinion the implementing Regulation No 22/62. If judgment of the Court in the Wünsche these Regulations are valid, it is doubtful case confirms the result suggested by the whether the national judge may proceed interpretation of Article 39 of the Treaty in accordance with paragraph 8 of the as regards the determination of the levies judgment in the Wünsche case regarding in the Regulations organizing the the first question, and deduct the agricultural market. The objective of the amount of the turnover equalization tax common agricultural policy is, according actually paid from the levy due from the to Article 39 of the Treaty, on the one importer. hand, to ensure a fair standard of living for the agricultural community, to

There is always in 20 of the Protocol on the Statute of the consequence a limit to the freedom of Court of Justice. appraisal of organs of the Community in

have the object of increasing the price of light on the concepts and objectives of imported poultry to a level of prices the different components of the levy. sought after and guaranteed on the These components are, as regards internal market is therefore not correct. imports from third countries, four in number. Article 39 (1) (e) of the Treaty imposes an obligation on the Council to strive The first component has to compensate for a level of prices neither too high nor for the difference between the prices of too low for the market in poultry in the feed grain in the exporting Member Member States and to direct the systems States or third countries on the one of levies towards this. hand, and those obtaining in the The plaintiff then states that if, in order importing Member State on the other to achieve an alignment of prices, the hand, having regard to the quantity different prices of goods having to be normally used for rearing and fattening imported were compared and brought poultry. up to the level of internal prices desired in the importing Member State, the The second component has as objective conditions of delivery and cost should to protect processing industry in the importing Member State and thus also be identical. The 'parity' would have to relate to the various stages of replaces the previous customs duty. marketing for which fixed prices would The third component guarantees the be applicable. If these parities were not preference in favour of Member States respected and adapted to each other the provided for by the EEC Treaty. objective of aligning the prices could not be attained. The fourth possible component has to make good any difference between the Before dealing with the question which was the comparable parity of internal 'sluice-gate price' to be calculated for prices on which the system of levy poultrymeat at origin and the current provided by Article 3 (4) of Regulation real price on the world market (offer No 22 concerning poultrymeat was price) free-at-frontier. Regulation No 22 based, the plaintiff states that, in its is based on the principle that the opinion, Regulation No 19/62 concern­ sluice-gate price, to be calculated ing cereals is the model for all the basic exactly, is not undercut except in special Regulations and that, in consequence, it circumstances.

After having compared Regulation No came into force, the levy calculated on 22/62 concerning poultrymeat with the the basis of the first and second basic Regulations concerning pigmeat components has the result that the whole (Regulation No 20/62), eggs (Regulation of the entry taxes are higher than before No 21/62 and beef and veal (Regulation the Regulation came into force. For No 14/64), the plaintiff examines the previously the customs duties payable two kinds of systems of levies contained had as their objective the protection of in Regulations Nos 20/62, 21/62 and the national processing industry both

Treaty. As a result, the plaintiff (second component) is an additional expresses the most serious doubts as burden of entry taxes. It is not justified regards the validity of the other method having regard to the principle of of calculation. In its opinion, if there are Community preference, since in this two kinds of systems of levy for respect a third special component of the attaining the aims of Article 39 of the levy was provided for. These Treaty, it follows from the principle of reservations with regard to the validity proportionality that the method which of the system of levies provided for by promises the best attainment of the Regulation No 22/62 show clearly, in desired aims should be chosen. The the plaintiff's opinion, that in any case plaintiff inquires into the reasons which the Community authorities have gone to have determined the choice of the two the extreme permitted limit if the system methods and can only propose as which they had promulgated can still be explanation that the Community regarded as legal. An interpretation of

It notes In the plaintiff's opinion the result is that nowhere was it expressly stated that, in the case of the application of whether the term market price in the each of the two methods, the Member States meant the sale price of Community authorities found that the poultry producers, the wholesale market prices in the importing Member purchase price, the retail purchase or State were fair before the Regulation sale price or anything else. Consequently concerning poultrymeat came into force. the question arises whether the gap It points out that since the second existing in the wording of Regulation component of the levy corresponds at No 22/62 can be overcome by way of least to the charges payable before it interpretation. In the plaintiff's opinion,

this question should be answered in the the problem regarding the calculation of affirmative. In short, the reply is to the levies that the turnover equalization be deduced from the meaning and aim of tax charged by the Federal Republic of the system of levies. These are expressed Germany on import would raise. They particularly in Articles 4 and 5 of did not become aware of the question Regulation No 19/62 as regards cereals, until the basic Regulations had come which by reason of its function as model into force and the German cereal should also be used to interpret importers disputed at law the validity of Regulation No 22/62. In the case of the the turnover equalization tax as a charge agricultural market wholesale trade is having an effect equivalent to a customs the central point within each Member duty. Recognition that the system of State; it checks off and distributes levies of the basic Regulations required, agricultural products (processed or if these Regulations were to attain their otherwise). In case of doubt the market objectives, that the levies should be prices are those of the wholesale trade. reduced by a flat-rate amount equal to Having regard to their objective, the the turnover equalization tax subse schemes of levies are directed, in the quently found an echo in the basic plaintiff's opinion, to the wholesale trade Regulations Nos 13/64 concerning milk of the Member States, the stage at which products and 14/64 concerning beef and the question arises whether a domestic veal. agricultural product should be purchased. The plaintiff asserts that in the present The plaintiff asserts that the wholesale case it is a question of applying to purchase price for domestic poultrymeat Regulation No 22/62 the consequences comprises the whole of the prior costs which flow from this finding. and charges attaching to slaughtered It consequently replies to the following poultry as well as the whole of the

. . ?' flat-rate sum). If such a reduction of the In the plaintiff's opinion, the first levy were not made, the German interpretation is the only correct and turnover equalization tax would result in possible one. It asserts that Article 5 of an increase of the levy. Regulation No 22/62 shows the way. It In the plaintiff's opinion, the draftsmen is clear that it provides that the systems of the basic Regulations Nos 19 and of levies established by Articles 3 and 4 22/62 did not see at the time of drafting are not intended to be immutable.

Article 5 of Regulation No 22/62 of the levy (fourth component). The reserves to the Commission the power of backwash which the German turnover authorizing a Member State, at its equalization tax created did not reach it. request, to reduce the amounts of the Its validity is not in issue. The plaintiff levies calculated under Articles 3 and 4. asserts on the other hand that under Although they did not yet have any Regulation No 91/65 of the Commission actual example, the draftsmen of the amounts of the levies are objectively Regulation No 22 understood at the excessive to the extent that they have time of drafting this provision that been fixed for imports of poultrymeat certain events which would require the into the Federal Republic of Germany. reduction of the levies of Articles 3 and According to an earlier claim by the 4 were foreseeable.

manner: be deducted directly or indirectly from the levy. This is quite consistent with the 'Articles 4 and 6 of Regulation No 22/62 objective and structure of the common of the Council of the European organization of the market in Economic Community dated 4 April poultrymeat. 1962 concerning the gradual establish As distinct from the common ment of a common organization of the organization of the market in cereals, the market in poultrymeat must be common organization of the market interpreted as meaning that the levy established by Regulation No 22/62 does payable at the time of import of not contain a price guarantee for poultrymeat from a third country into producers on the domestic market.

JUDGMENT OF 5. 12. 1973 — CASE 126/73

calculation. But the Commission is of imported poultrymeat to a fixed level determined in advance. the opinion that this turnover equalization tax has no relevant Nor does Article 5 of Regulation No 22 relationship with the turnover equaliza offer, in the Commission's opinion, any tion tax paid on the basis of the customs permanent guarantee of the market value of the various consignments of prices within the country. The wording poultry, the deduction of which the and scope of this provision show that it plaintiff claims.

There imperative reason for deducting turnover is no provision that Member States may equalization tax applicable to the import modify this amount of their own of poultry itself from the levy. That is initiative, which would moreover be why Regulation No 22/62 does not contradictory to the object of the system, contain an express provision comparable the application in all Member States of to Article 2 (1) of EEC Regulation No levies harmonized by reference to 13/64 (OJ 1964, p. 549) and to Article 5 uniform criteria. (1) of Regulation No 14/64 (OJ 1964, p. Nor, the Commission asserts finally, can 562) which would require or authorize the obligation to deduct turnover equali the Commission, when fixing the levies, zation tax from the amount of the levy to deduct the turnover equalization tax be justified, in the sphere of Regulation from the amount of the levies. Nor, in No 22/62, by analogy with the systems the Commission's opinion, does the of common organization of the market obligation to deduct turnover equaliza in cereals, milk and beef and veal. tion tax follow indirectly from the Neither from the structural point of view criteria for calculating the levy. It is not nor from the market organization was possible to take into consideration there anything similar in the case in turnover equalization tax payable on question between the system of levies for import of poultry in calculating the slaughtered poultry and the system of components of the levy. None of the levies of Regulations Nos 19/62, 13/64 fixed components justifies the inclusion and 14/64, and some similarity is of turnover equalization tax in the necessary before drawing analogies.

BUSCH v HAUPTZOLLAMT HAMBURG-ERICUS

For the abovementioned reasons the Regulations on the market organization Commission interprets Article 4 of does not expressly provide for the Regulation No 22 as meaning that a deduction from the levy of the turnover flat-rate amount to be fixed by the equalization tax it is proper, in the competent institutions of the Com­ opinion of the Federal Republic of munity and equal to the turnover Germany, to take the view that the equalization tax payable on import may deduction was not desired by the not be deducted from the levy. Council.

Community Regulation knew that threshold price, which in its turn con­ stitutes the basis for the determination slaughtered poultry imported into the Federal Republic of Germany was of the levy. In addition, the Court only subject to turnover equalization tax. In stated that a subsequent deduction of the the opinion of the Federal Republic of turnover equalization tax from the levy must be made when 'the national Germany, this is apparent from Article 3 (2) (b) of Regulation No 22/62. It refers legislature has omitted to consider it in moreover to Article 3 (1) of Regulation calculating the threshold price'. No 20 of 4 April 1962 on the gradual The Federal Republic of Germany adds establishment of a common organization that the arguments devoted to Article 4 of the market in pigmeat (OJ 1962, p. are applicable to Article 6 of Regulation 945), which, too, provides for the No 22/62 and concludes that the first deduction of domestic charges from the question should be answered in the levy. In the case where one of the negative.

Grounds of judgment

1 By order dated 16 March 1973, filed at the Registry on 18 April 1973, the Hamburg Finanzgericht referred to the Court for a preliminary ruling, under Article 177 of the EEC Treaty, questions concerning the interpretation of Regulation No 22 of the Council of 20 April 1962 on the gradual establishment of a common market organization in poultrymeat (OJ 1962, No 30), and on the validity of Regulations Nos 91/65 and 124/65 of the Commission of 29 June and 22 September 1965 (OJ 1965, Nos 116 and 157).

To this effect Article 4 (1) and (2) indicates all the components of the calculation on the basis of which the amount of the levy is fixed.

According to this provision, this levy has various components, of which one is fixed in advance for a period of three months and the others are calculated respectively by reference to the levies as regards Member States and on the basis of a fixed percentage of fixed averages.

As regards moreover the additional amount referred to in Article 6 of the same Regulation, its level is directly established by paragraph 3 of this provision, providing that, in the case where the free-at-frontier prices on import fall below the sluice-gate price, the levy shall be increased in each Member State by an amount equal to the difference between these two prices.

BUSCH v HAUPTZOLLAMT HAMBURG-ERICUS

4 It follows from these provisions that all the components of the levy applicable to the products in question, as well as any additional amount, are fixed by Regulation No 22/62 and that they do not leave the Member States with any autonomous power of affecting the amount of one or other charge by the expedient of criteria of calculation other than those provided for by the legislature.

This finding is confirmed by Article 4 (3) of the aforementioned Regulation, from which it appears that the fixing of the amount of the levy depends entirely on a Community procedure referred to in Article 17 of the same Regulation.

Upon reading the pleadings;

JUDGMENT OF 5. 12. 1973 — CASE 126/73

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 22 of the Council of 4 April 1962; 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 Hamburg Finanzgericht by order of that court dated 16 March 1973, hereby rules:

Articles 4 and 6 of EEC Regulation No 22 of the Council of 20 April 1962 must be interpreted as meaning that the levy and the additional amount payable on import of slaughtered poultry and poultrymeat from third countries must not be reduced by a charge such as the turnover equalization tax on import.