C-74/76

JUDGMENT OF 22. 3. 1977 — CASE 74/76

prohibition of quantitative restrictions within the field of application of on imports and measures having Article 95 of the Treaty. equivalent effect laid down by Article In order to apply Article 95 of the 30. The aspects of aid, which are not Treaty not only the rate of direct and necessary for attainment of its object indirect internal taxation on domestic or for its proper functioning and and imported products but also the which contravene this prohibition basis of assessment and detailed rules may for that reason be held to be for levying the tax must be taken into incompatible with this provision. consideration. 4. The fact that an aspect of aid, which is As soon as any differences in this not necessary for the attainment of its respect result in the imported product object or for its proper functioning, is being taxed at the same stage of incompatible with a provision of the production or marketing at a higher Treaty other than Articles 92 and 93 rate than the similar domestic product does not in fact invalidate the aid as a the prohibition of Article 95 is whole or for that reason vitiate by infringed. reason of illegality the system of 6. It is nevertheless for the national court financing the said aid. within the framework of its own legal 5. Since Article 95 of the Treaty refers to system to decide whether the whole internal taxation of any kind the fact of any internal taxation which is that a tax or levy is collected by a discriminatory within the meaning of body governed by public law other Article 95 or only that part of it which than the State or is collected for its exceeds the tax assessed on the

THE COURT

composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

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

gives the following

IANNELLI v MERONI

JUDGMENT

to the purchaser, the Meroni company. render such levies illegal in so far as The latter company refused to pay the they are imposed upon imported levy on the ground that it is Community products — since the incompatible with Community law, on revenue concerned which is collected the one hand, because the levy in is intended to finance an activity question is imposed for the purpose of contrary to the provisions of the financing a system of aids which Treaty and so illegal? contravenes Article 30 of the Treaty and, (3) If an affirmative answer is given to on the other hand, because in any case it the questions set out above, are the infringes Article 95 of the Treaty. rules in Article 30 et seq. of the EEC Treaty directly applicable and do they 2. Faced with this refusal to pay the create an individual right for the levy, the Iannelli & Volpi firm brought importers of Community products to proceedings before the Pretore di Milano, request the reimbursement of levies who, after ordering ENCC to intervene paid (further, from what date such in the proceedings by order of 26 June right can be enforced)? 1976 stayed proceedings and, in (4) If a negative reply is given to the accordance with Article 177 of the preceding questions, does the Treaty, referred to the Court of Justice prohibition against tax discrimination for a preliminary ruling the following established by Article 95 of the questions: Treaty also cover special levies (1) Does a system of subsidies involving imposed upon both domestic goods a public body and based on national and imported goods the revenue from regulations which (with reference to which is intended for minor public the period in question) enable bodies other than the State? domestic publishers to obtain at (5) Does discrimination prohibited by reduced prices only newsprint Article 95 of the EEC Treaty obtain

(6) If, from the answer to the question goods increased by customs duties, under point 5 above, it follows that licence fees and also certain transport, the imposition of a levy in a insurance and packaging expenses, discriminatory manner is prohibited even if these expenses are not because the basis for its calculation is included on the invoice' (second higher only for imported products, paragraph of Article 7; last paragraph does Article 95 of the Treaty create of Article 8). for importers of products coming (d) imported paper and cardboard are from Community countries the subject to a contribution of 3 % of individual right to request the 100 % of the 'value of the imported reimbursement of that part of the goods' within the meaning of the said levy paid in excess as from 1 second paragraph of Article 7. January 1962, the date of the (3) the Minister responsible may, on a beginning of the second stage? proposal of ENCC, reduce the contribution in the case mentioned under (b) above (Article 9). 3. ENCC, a body governed by public law, is an association of producers and consumers of cellulose and also of 4. The operations of ENCC, in so far as producers of paper and its object is to they are a system of aids within the promote the use of cellulose in Italy and meaning of Articles 92 and 93 of the also to regulate the production and EEC Treaty, have been kept under marketing of paper. Amongst other constant review by the Commission as activities it subsidizes the purchase, by provided for by Article 93 (1). As a result of this review the Commission proprietors of newspapers and periodicals, of paper intended for these questioned whether some aspects of this publications. Its operations are financed system were compatible with the Treaty, by levies on the production, sale and in particular import of cellulose and paper. The (1) the fact that newsprint imported detailed rules for the levy on sales and direct from abroad by newspaper imports of paper and cardboard are laid undertakings is not subsidized whereas down by the Ministerial Decree of 3 July newsprint produced in Italy or imported 1940 and may be summarized as follows: through ENCC is subsidized;

even though, according to the Italian mitted under Article 20 of Government's explanation, it was the the Protocol on the Statute administration's practice to allow of the Court of Justice of importers to apply to the Minister, who the EEC had complete discretion when making his decision, for a reduction of the basis A — Observations of the Commission of assessment. The Commission calls attention to Cases After the system had been re-structured 77/72 (Capolongo) and 97/74 (IGAV) of in a way which was designed to meet the which this case is an extension and Commission's observations the latter, by analyses the discriminatory features of a letter of 20 November 1974, notified the system of aids before it was amended the Italian Government that as a result of in 1974. In particular as far as concerns the alterations made the system of aids in the taxation of certain imported paper it question 'now complied with the submits that provisions of the Treaty relating to aids'. (a) not all imported processed paper products were treated in the same 5. The questions raised by the national way as domestic products; court relate to those parts of the system (b) the fact that pursuant to an described above, which were the subject administrative practice the Minister of the Commission's observations, and was permitted, on the application of concern the period preceding their the parties concerned, to eliminate abolition by the Italian Government, this inequality is not sufficient to during which the levies, the legality of remove the fiscal discrimination which is challenged before the national prohibited by Article 95, because the court, were in fact paid. principle of the protection of legal certainty precludes consideration of The order making the reference was matters falling within the Minister's registered at the Court Registry on 26 discretion for the purpose of July 1976. determining whether or not there has been discrimination. In accordance with Article 20 of the Protocol on the Statue of the Court of The need for all those liable to pay the Justice of the EEC written observations levy to have recourse to a domestic were lodged by the Commission of administrative body to obtain equality of the European Communities, the Ente fiscal treatment amounts in the final Nazionale per la Cellulosa e per la Carta, analysis to a breach of the subjective the intervener in the main action, and rights which Article 95 confers upon the Meroni company, the defendant in individuals. the main action. Therefore the Pretore was right not to mention the beforementioned adminis­ The Italian Government submitted its observations during the hearing in open trative practice in the fifth question. court on 25 January 1977. The first question

Although almost all systems of aid have Therefore among the actions which an effect on trade and are for this reason persons liable to pay the levy might take capable of influencing it, their three situations can be distinguished: compatibility with the provisions of the (1) aids prohibited by Article 92 and not Treaty should nevertheless be considered subject to conditions which could be as a whole in relation to Article 92 and evaluated independently under Ar with due regard to the absolute ticle 30: only Article 93 (2) is applied; discretionary power which Article 93 (2) aids prohibited by Article 92, subject

pendently under Article 30: possible (b) The Commission however points application of Article 169 and of the out that a logical interpretation of the guarantees that legal proceedings can question suggests that it refers to the be brought given to those persons possibility of separating, when a system liable to pay the levy as a of aids is analysed, the conditions or consequence of the direct effect of aspects which, although they are an Article 30. integral part of the said system, can be evaluated independently under Article 30 The proposition that it might be possible without questioning whether the aid to review certain aspects of a system of itself complies with Article 92. aids under provisions other than Article

IANNELLI v MERONI

visions of the Treaty which apply to B — Observations of ENCC them can be established. ENCC takes the view that the questions A finding that a parafiscal tax, such as referred by the Pretore di Milano are the one described in the second question, concerned mainly with: is incompatible with the Treaty can only (1) on the one hand the compatibility be made if this tax has itself the with Article 30 of the EEC Treaty of attributes of any of the taxation the systems, managed by ENCC, of prohibited by Articles 13 or 95 of the aids to newspapers, and; Treaty. (2) on the other hand the compatibility with Article 95 of the EEC Treaty of The fourth question the system of taxation by ENCC of paper products. The answer can only be in the affirmative because the prohibition under I — The compatibility of the system of Article 95 also applies to parafiscal aids to newspapers with Article 30 charges used to finance the operations of of the Treaty a body governed by public law other than the State. The first question

JUDGMENT OF 22. 3. 1977 — CASE 74/76

a note dated 14 July 1976 from the measures having an effect equivalent to President of the Council of Ministers, the quantitative restrictions or charges having Commission by a decision of 16 June an effect equivalent to customs duties. 1976 given pursuant to Article 93 (2) of the Treaty merely asked the Italian If the system of subsidizing prices Republic to inform the persons applied earlier is considered in the light concerned by appropriate methods of the of Article 92 of the Treaty it is found not way in which it would interpret and to have produced a restrictive effect to apply the new legislative provisions. the detriment of foreign paper, and this is established by comparing the volume ENCC does not admit that in law Article of imports of newsprint in 1973 (a period 30 of the EEC Treaty applies to a system when direct imports did not derive any which falls within Article 92. It asserts benefit from the subsidy unless they were that there has not been any infringement effected through the medium of the of Article 30 of the EEC Treaty or ENCC) and in 1975 when this condition of Directive No 70/50/EEC of 22 was no longer applied. ENCC's December 1969 (OJ English Special conclusions are: Edition, 1970 (I), p. 17) and goes on to (1) that the restrictive effect normally say that any discrimination there might connected with aid has not even been be at a stage subsequent to that of established in this case and importation falls moreover within the furthermore

provisions which apply to aids and not (2) that in any event the aid benefits a within Article 30. Now such provisions product not exposed to competition are by their very nature always from imported products, since it is discriminatory and invariably exert a the Italian newspaper industry which restrictive influence to the detriment of is concerned.

IANNELLI v MERONI

has no relevance in this case. ENCC rejects the argument of the Meroni undertaking that the foreign II — The taxation of paper products in product is bound to be taxed on its value the light of Article 95 of the as a finished product when it is Treaty (the fifth question) imported, whereas the Italian paper product is discharged once and for all by The question is whether the taxation of the tax levied, if the occasion arises, 'paper products' (prodotti cartotechnici), when the paper or cardboard used in the that is to say of products which do not manufacturing process are bought.

factors. In fact the last paragraph of The rate of the ENCC contribution is Article 8 of the Ministerial Decree of 3 %, most of which (5/6ths) is borne by 3 July 1940 provided for a flat-rate the consumer, the balance being payable reduction of the assessable value of by the Italian producers or by the imported paper products to 70 % importer. thereof, that is to say that a rate of 2.10 % instead of 3 % is applied. The charge to tax arises, both in the case Moreover the administrative authority's of domestic and imported products, on practice in interpreting Article 9 allowed the disposal of the products in question. not only paper manufacturers but also Although in the case of imported importers who had good reason to products the contribution is levied on the consider the reduction to 70 % as import value, it is not paid until they are inadequate to apply to the Minister actually disposed of. responsible with a view to arranging for a more satisfactory appraisal of the As far as concerns the determination of non-taxable elements which would the basis of assessment this, according to enable them to be taxed in a manner fiscal rules, is the invoice value in the which reflected the actual assessable case of domestic products; in the case of content of the paper and cardboard in imported products it is their import the products concerned.

JUDGMENT OF 22. 3. 1977 — CASE 74/76

C — Observations submitted by Meroni The main purpose of Articles 92 to 94 of the Treaty is to avoid distortion of By way of a preliminary observation competition within the common market. Meroni stresses the fact that, since the The reference made in Article 92 to trade importation and payment took place in between Member States being affected by 1971, the questions referred must be aid has two functions, like the same answered with reference to the situation reference in Articles 85 and 96 of the at that time. Treaty. On the one hand it is the criterion for the division of legislative The first three questions (Article 30 of powers between the Community and the Treaty) Member States and on the other hand it is the material criterion for the The first three questions deal with the applicability of Article 92. Therefore possibility of using Community Article 92 also applies to the premise in provisions prohibiting measures having this case of aid permitting imports an effect equivalent to quantitative within the EEC to be restricted. restrictions in order to classify a system of parafiscal charges forming part of a However, in so far as such a system of system of subsidies so as to discover the State aid completes a measure having

IANNELLI v MERONI

It guarantee one of the foundations of the relies in the second place on the unity of Community, namely the establishment the system at issue, since the yield from of a common market within which goods the disputed levy is to be used to finance can circulate freely as they do within a system restricting imports. the territory of a single State. This 'foundation' is so important that Finally in Meroni's view the point cannot attainment of the objectives arising out of be taken against it that Commission Directive No 70/50/EEC of 22 the free movement of goods cannot be restricted by the rules relating to aid December 1969 (OJ, English Special which form part of the 'Policy of the Edition, 1970 (I), p. 17) which defines Community' (Part three of the Treaty). measures having an effect equivalent to Finally it follows from the direct quantitative restrictions on imports not applicability of the rules relating to the covered by other provisions, shows that the measures at issue are not measures of free movement of goods that the this kind because this directive excludes supremacy of the rules relating to measures having equivalent effect over from its field of application measures those dealing with State aid is better able 'applicable equally to domestic and to satisfy both the general interest in imported products'.

imports of Community products. On this The last three questions (Article 95 of the point Meroni argues in the first place Treaty)

JUDGMENT OF 22. 3. 1977 — CASE 74/76

Meroni points out in the first place that (b) In the case of the imported product, its analysis of the compatibility of the on the other hand, the basic taxable levies with Article 95 of the Treaty is an amount is always 70 % of the value alternative argument. It is only necessary of the goods, which, according to the if they cannot be prohibited under second paragraph of Article 1 of the Article 30. In its view the levies do not Ministerial Decree of 3 July 1940, form part of a general internal system of represents the actual value of the fiscal charges but are rather to be goods plus certain packaging, regarded as coming under parafiscal insurance and transport costs, even if taxation and individual resources of these expenses are not invoiced to public bodies of comparatively small the importer. Therefore discrimina­ importance. Further they do not apply tion occurs twice:

equally to imported and domestic — if the levy on the imported products. If the rate of the levy is the product is compared to that same in both cases, the basis for the applied to domestic raw assessment to tax is only the same in the material, the imported product is case of paper and cardboard. On the taxed on the total value shown on

other hand in the case of the products of the invoice and not merely on the the paper industry and processed paper, basis of the cost of the paper that is to say, in the case of more finely treated as a raw material; finished products containing paper or — if the levy on the imported cardboard as raw material, the basic product is compared to that on taxable amount differs according to the domestic finished product, whether the products are domestic or the basic taxable amount in the

on the invoice (first paragraph of Article 1 of the Ministerial Decree If the assessments of the levy on the of 3 July 1940); imported product and on the domestic — if the producer of a raw material product treated as a raw material are himself processes it into a more compared, the discrimination is parti­ finely finished product and resells cularly serious but it is even present if it, the basic taxable amount is in the assessments of the levy on the principle 70 % of the net amount imported product and on the domestic shown on the invoice relating finished product after the raw material to the sale, that is to say 70 % of has been processed are compared. the net price of the finished product; On the basis of these considerations On a proposal from ENCC the Meroni suggests that the last three Minister for Industry can however questions relating to the interpretation of vary the rate of 70 %, particularly if Article 95 should be answered as follows. the value of the paper represents a (a) Having regard to the case-law of the small percentage which is less than Court in Case 77/72 Carmine 70 % of the total value of the Capolongo v Azienda Agricola finished product (Article 9 of the Maya [1973] ECR 611 and Case Ministerial Decree of 3 July 1940). 94/74 Industria Gomma Articoli

IANNELLI v MERONI

— that there is fiscal discrimination the Pretore di Milano, challenges the prohibited by Article 95 if the tax reasoning used by ENCC to prove that borne by the domestic finished the disputed system of taxation, because product (in this case wallpaper) is of the amendments already incorporated assessed on the net price of the into it by the Decree of 3 July 1940, was raw material (in this case paper), not discriminatory. Whatever ENCC may whereas the basic taxable amount say Article 9 of this decree only covers of the similar imported product is domestic finished products other than the total value of the product imports.

public authority a discretion to 95. National rules would only be in a reduce the basic taxable amount form compatible with this provision if (equally) in the case of imported they took the value of the amount of products does not preclude the paper contained in the finished product circumstances described in a case as the basis for the calculation of the of this kind from being treated as amount of the levy on the imported fiscal discrimination within the product obtained by the processing of meaning of Article 95 of the the raw material.

affirmative. Community provisions as long as

the occasion of the first disposal by As far as concerns the conformity of the the paper-mill; ENCC system of subsidies with Article (2) in the case of a disposal of the 30 of the Treaty it asserts that the fact finished product tax is charged on that the purchase of imported newsprint 70 % of the net amount shown on only benefits from the subsidy if the the invoice on the occasion of the importing is carried out by ENCC is not first disposal; an infringement of this provision. This (3) if the paper or cardboard is utilized or condition does not restrict importing but directly consumed by the paper-mill directs it through specific channels. Even for purposes other than the pro­ if it were to lead to an indirect duction of the finished product tax is restriction, this would correspond to the charged in full on the occasion of the restrictions which are the inevitable said utilization or consumption on an consequence of every form of aid. amount equivalent to the value of the Therefore the compatibility of the ENCC commodity (paper) used. system with the Treaty must only be considered in the light of Articles 92 to In each of these three cases the basis of 94 of the Treaty. The distinction drawn assessment, the paper content, is the by the Commission between the same. In the second of these cases in substantive aspects of aid (such as its which the paper content is normally economic justification, the nature of the high a flat-rate of 70 % is charged, since products which it benefits and the size of this is deemed to represent the the subsidy) which fall within Articles 92 proportion of the value of the finished and 94 of the Treaty and the formal product attributable to the paper. Since conditions, such as the conditions of however this fixed rate may prove to be elegibility for the subsidy, which might too high the Minister is authorized, on as such fall within other provisions of the request being made, to reduce this Treaty, is arbitrary. As the condition of coefficient. eligibility for aid is one of the rules relating thereto, it is a feature of aid and In the view of the Italian Government therefore an integral part thereof. imported products may also benefit from

Decision

1 By order of 25 June 1976 which reached the Court Registry on 26 July 1976 the Pretore di Milano, referred to the Court under Article 177 of the EEC Treaty various questions relating to the interpretation of Articles 30 and 95 of the Treaty.

These questions were raised during proceedings against the defendant in the main action, an Italian purchaser of imported wallpaper, by the Italian vendor, the plaintiff in the main action, which charged the purchaser a proportion of the levy which on importing the goods into Italy it had previously paid to Ente Nazionale per la Cellulosa e per la Carta (hereinafter referred to as 'ENCC' pursuant to Law No 868 of 13 June 1940 (Gazzetta Ufficiale No 170 of 22 July 1940), Law No 168 of 28 March 1956 (Gazzetta Ufficiale No 79 of 3 April 1956) and to the Ministerial Decree (Decreto Ministeriale) of 3 July 1940 (Gazzetta Ufficiale No 175 of 25 July 1940).

JUDGMENT OF 22. 3. 1977 — CASE 74/76

2 ENCC is a body governed by Italian public law and its object is to promote and regulate, in particular by means of subsidies, the production of cellulose and paper in this Member State.

A large part of the aids administered by ENCC consists of subsidies to newspaper publishers for the purpose of enabling them to obtain at a reduced price paper purchased from paper mills and used for publishing.

5 The main point raised by the questions referred is whether a national court, when asked to rule whether a system of State aids within the meaning of

IANNELLI v MERONI

Article 92 or some of its aspects are compatible with the Treaty, may take account of a possible infringement of Articles 30 and 95 and, if so, what are the criteria which make it possible to ascertain whether in circumstances such as those which have arisen in this case the said articles have in fact been

infringed.

It is appropriate to point out that these questions refer to the situation which existed before the modification of the system of aids in question, which the Commission required to be carried out under the powers vested in it by Article 93 (2) of the Treaty and which the Italian State put into effect as from 1 January 1974.

The first three questions

JUDGMENT OF 22. 3. 1977 — CASE 74/76

7 It is advisable to answer all these questions together.

8 The prohibition in Article 30 of the Treaty of all quantitative restrictions on imports or measures having equivalent effect is aimed, on the one hand, at those measures prohibiting imports in whole or in part and, on the other hand, as mentioned by Commission Directive No 70/50/EEC of 22 December 1969 (OJ, English Special Edition 1970 (I), p. 17) at 'measures, other than those applicable equally to domestic or imported products', which hinder imports which could otherwise take place, including measures of importation 'more difficult or costly than the disposal of domestic production'.

9 However wide the field of application of Article 30 may be, it nevertheless does not include obstacles to trade covered by other provisions of the Treaty.

In fact, since the legal consequences of the application or of a possible infringement of these various provisons have to be determined having regard to their particular purpose in the context of all the objectives of the Treaty, they may be of a different kind and this implies that their respective fields of application must be distinguished, except in those cases which may fall simultaneously within the field of application of two or more provisions of Community law.

Thus obstacles which are of a fiscal nature or have equivalent effect and are covered by Articles 9 to 16 and 95 of the Treaty do not fall within the prohibition in Article 30.

The parties concerned cannot therefore simply, on the basis of Article 92 alone, challenge the compatibility of an aid with Community law before national courts or ask them to decide as to any incompatibility which may be the main issue in actions before them or may arise as a subsidiary issue.

The effect of an interpretation of Article 30 which is so wide as to treat an aid as such within the meaning of Article 92 as being similar to a quantitative restriction referred to in Article 30 would be to alter the scope of Articles 92 and 93 of the Treaty and to interfere with the system adopted in the Treaty for the division of powers by means of the procedure for keeping aids under constant review as described in Article 93.

13 The prohibition of quantitative restrictions and measures having equivalent effect laid down in Article 30 of the Treaty is mandatory and explicit and its implementation does not require any subsequent intervention of the Member States or Community institutions.

The prohibition therefore has direct effect and creates individual rights which national courts must protect; this occurred at the end of the transitional period at the latest, that is to say on 1 January 1970 as the provisions of the second paragraph of Article 32 of the Treaty indicate.

14 Those aspects of aid which contravene specific provisions of the Treaty other than Articles 92 and 93 may be so indissolubly linked to the object of the aid that it is impossible to evaluate them separately so that their effect on the compatibility or incompatibility of the aid viewed as a whole must therefore of necessity be determined in the light of the procedure prescribed in Article 93.

17 Therefore the answer to the first three questions must be: (a) that Article 30 of the Treaty has direct effect and creates, at the end of the transitional period at the latest, for all persons subject to Community law rights which national courts must protect; (b) that the aids referred to in Articles 92 and 93 of the Treaty do not as such fall within the field of application of the prohibition of quantitative restrictions on imports and measures having equivalent effect laid down by Article 30 but those aspects of aid, which are not necessary for the attainment of its object or for its proper functioning and which contravene

IANNELLI v MERONI

this prohibition, may for that reason be held to be incompatible with this provision; (c) the fact that an aspect of aid, which is not necessary for the attainment of its object of for its proper functioning, is incompatible with a provision of the Treaty other than Articles 92 and 93 does not in fact invalidate the aid as a whole or for that reason vitiate by reason of illegality the system of financing the said aid.

The fourth question

18 The fourth question asks whether 'if a negative reply is given to the preceding questions, the prohibition against tax discrimination established by Article 95 of the Treaty also covers special levies imposed upon both domestic goods and imported goods the revenue from which is intended for minor public bodies other than the State' Having regard to the answers to the first three questions it appears to be advisable to answer the fourth question.

19 Since Article 95 of the Treaty refers to internal taxation of any kind, the fact that a tax or levy is collected by a body governed by public law other than the State or is collected for its benefit and is a charge which is special or appropriated for a specific purpose cannot prevent its falling within the field of application of Article 95 of the Treaty.

As soon as any differences in this respect result in the imported product being taxed at the same stage of production or marketing at a higher rate than the similar domestic product the prohibition of Article 95 is infringed.

This is what would happen if a tax is assessed on the value of a product and in the case of the imported product factors for assessment are taken into consideration which are likely to increase the value of the imported product vis-à-vis the corresponding domestic product.

The fact that the administration has a discretion in specific cases to grant reductions of the tax assessed on both domestic and imported products cannot remove any discrimination which is incompatible with Article 95.

22 As the Court has held, on the last occasion in its judgment of 17 February 1976 (Case 45/75 Rewe-Zentrale des Lebensmittel-Großhandels GmbH v Hauptzollamt Landau/Pfalz [1976] ECR 193) Article 95 of the Treaty has direct effect and creates individual rights which national courts must protect.

It is nevertheless for the national court within the framework of its own legal system to decide whether the whole of any internal taxation which is discriminatory within the meaning of Article 95 or only that part of it which exceeds the tax assessed on the domestic product is to be regarded as not payable.

Costs

2. The aids referred to in Articles 92 and 93 of the Treaty do not as such fall within the field of application of the prohibition of quantitative restrictions on imports and measures having equivalent effect laid down by Article 30 but the aspects of aid, which are not necessary for the attainment of its object or for its proper functioning and which contravene this prohibition may for that reason be held to be incompatible with this provision;

3. The fact that an aspect of aid, which is not necessary for the attainment of its object or for its proper functioning, is incompatible with a provision of the Treaty other than Articles 92 and 93 does not in fact invalidate the aid as a

whole or for that reason vitiate by reason of illegality the system of financing the said aid;

4. Since Article 95 of the Treaty refers to internal taxation of any kind the fact that a tax or levy is collected by a body governed by public law other than the State or is collected for its benefit and is a tax charge which is special or appropriated for a specific purpose cannot prevent its falling within the field of application of Article 95 of the Treaty;

5. In order to apply Article 95 of the Treaty not only the rate of direct and indirect internal taxation on domestic and imported products but also the basis of assessment and detailed rules for levying the tax must be taken into consideration;

As soon as any differences in this respect result in the imported product being taxed at the same stage of production

Delivered in open court in Luxembourg on 22 March 1977.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE-GENERAL WARNER DELIVERED ON 10 FEBRUARY 1977

My Lords, whose resources are used to promote certain sectors of the economy of the Of these two cases, one, Case 74/76, Member State concerned. Both cases which I shall for convenience call 'the raise questions relating to the Italian case', comes to the Court by way interpretation of and interrelationship of a reference for a preliminary ruling between the provisions of the EEC under Article 177 of the EEC Treaty by Treaty on aids granted by Member States the Pretura of Milan; the other, Case (Articles 92 and 93), on internal taxation 78/76, which I shall call 'the German (Article 95), and, in the Italian case, on case', comes to the Court by way of a measures having equivalent effect to reference for such a ruling by the quantitative restrictions on imports Verwaltungsgericht of Frankfurt-am- (Article 30), and, in the German case, on Main. charges having equivalent effect to customs duties (Articles 9 (1), 12 and 13 Putting it very simply, both cases are (2)). In addition the German case raises a about charges imposed by national law question of interpretation of Article 177 on imported goods and payable to bodies itself.