C-105/76

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: G. Reischl

Registrar: A. Van Houtte

gives the following

JUDGMENT

and to its beet processing industry' — Article 34 of Regulation No that is to say, the sugar industry. The 1009/67'; subsidy may not exceed a specified sum — the subsidy to the processing industry per metric ton of beet or per hundred in the form of the refund of tax paid kilogrammes of white sugar; it may only on the proceeds of the purchase and be granted in respect of a quantity which transport of beet; is within the basic quota. With reference — the subsidy in respect of the storage to this, the fourteenth recital in the costs of the surplus from the 1967/68 preamble to the said regulation states harvest and 'in respect of losses in that 'beet and sugar production in Italy is exporting it [surplus white sugar rendered difficult by climatic conditions produced during the 1967/68 sugar and, in the case of beet production, by year] … which has to be exported the additional problems presented by the before 1 July 1969 (Regulation No application of modern production 457/68 of 11 April 1968)'; methods' and that 'provision should be — the subsidy to sugar undertakings in made for granting temporary subsidies to order to offset payments made by the both these activities'. latter to beet growers in accordance with an earlier national measure; Under Article 38 of Regulation (EEC) No — aid towards a financial reorganization 3330/74 of the Council of 19 December in respect of the cost of transactions 1974, which repeals Regulation No carried out in the past by the 1009/67/EEC, the Italian Republic is Equalization Fund in respect of the authorized to grant, during the price of imported sugar; 1975/1976 to 1979/1980 marketing years, — a subsidy to exporters equivalent to adaptation aids which may not exceed a the amount of the surcharge referred total of 5·9 units of account per metric to above; ton of beet with a 16 % sugar content — interest on debit balances for subsidy processed into sugar.

167, p. 9). July 1975) and increased to 70 lire per kilogramme for the 1976/1977 marketing Order No 1195, adopted on 22 June year (CIP Order No 20/1976 of 1 July 1968 by the Comitato Interministeriale 1976). dei Prezzi (Interdepartmental Committee on Prices, hereinafter referred to as 'the During the 1975/1976 marketing year CIP') (Gazzetta Ufficiale No 162 of 27. 6. provision was made for the following 1968, p. 4057) established on the Italian subsidies: market the Cassa Conguaglio Zucchero (a) a subsidy for home-produced beet (Sugar Equalization Fund) financed in amounting to 5 056·30 lire per metric particular by a sovrapprezzo (surcharge) ton (CIP Order No 18/1975 of 11 on every quantity and type of white August 1975, paragraph 3); sugar, whether home produced or (b) an additional subsidy for home- imported. produced beet amounting to 3 165·11 lire per metric ton (above-mentioned Paragraph 6 of the operative part of this CIP Order, paragraph 4); measure provided that the income of the (c) a subsidy for home-produced sugar Fund must be used to pay for: amounting to 2 156·30 lire per 100 — the subsidy to beet growers and the kilogrammes (CIP Order No 19/1975 beet processing industry 'pursuant to of 11 August 1975, paragraph 5 d).

B — The company Interzuccheri S.p.A. position of a pecuniary charge having sold 10 000 kilogrammes of sugar to the the characteristics of the 'surcharge Ditta Rezzano e Cavassa for a sum of on sugar, as established and regulated 5 100 000 lire including the surcharge of by the CIP Order No 1195 of 22 June 70 lire per kilogramme. At the time of 1968 and subsequent amendments payment the purchaser refused to pay (CIP Orders No 1222 of 20 June the amount corresponding to the 1969, No 9 of 30 June 1970, No 15 of above-mentioned surcharge, that is to 30 June 1971, No 7 of 3 August 1972, say, 721 000 lire, claiming that the No 9 of 26 June 1973, No 27 of 28 surcharge was contrary to Community June 1974, No 19 of 7 August 1975, provisions. The applicant company No 20 of 1 July 1976 and No 24 of 1 thereupon brought proceedings before October 1976): the Pretore di Recco with a view to (a) which is applied by a decision of obtaining an order that the defendant the national authority to any should pay the sum in question. quantity of sugar, whether home produced or imported; In defence Ditta Rezzano e Cavassa (b) the revenue from which is contested the application of the applicant assigned in part to producers of and contended that the question of the beet established in the territory of legality under Community law of the the State which imposes the surcharge had already been referred to charge, in part to the sugar the Court of Justice of the European industry also established in the Communities by the Pretore di territory of that State and in part Abbiategrasso. to cover various charges (including the management expenses of the On 21 October 1976 the Associazione Cassa Conguaglio Zucchero)? Nazionale tra gli Industriali dello 2. If the reply to Question 1 is in the Zucchero, del Lievito e dell'Alcool affirmative, does the prohibition (hereinafter referred to as 'Assozucchero' against imposing the above- applied to intervene in the case claiming mentioned pecuniary charge take that the applicant's case was well effect from the entry into force of founded and that the objections raised by Regulation No 1009/67/EEC, or from the defendant company should be some other date? dismissed. 3. From the date when the prohibition entered into force, have individual By order of 21 October 1976, the Pretore traders who have imported sugar (or di Recco allowed the intervention of the products referred to in the said Assozucchero and decided to stay the EEC Regulations) from other member proceedings and to refer to the Court of countries of the Common Market an

second subparagraph of Article 40 (3) ECR 699). In the first of these judgments of the Treaty, according to which the Court established a link between the the common organization of the aid and the system adopted for its agricultural markets 'shall exclude any financing; the second is concerned with discrimination between producers or the case in which the proceeds of a duty consumers within the Community'? imposed both on the domestic product and on the imported product are The order making the reference was intended to finance specific advantages lodged at the Court Registry on 28 for domestic production only, which October 1976. would constitute a charge having an effect equivalent to a customs duty; the Pursuant to Article 20 of the Protocol on third judgment reaffirmed the strict the Statute of the Court of Justice of the conditions under which an internal levy EEC, written observations were is to be considered as a charge having an submitted by the plaintiff in the main effect equivalent to a customs duty.

Government of the Italian Republic, represented by its Ambassador, Adolfo The first condition is satisfied if the Maresca, acting as Agent, assisted by Ivo whole of the proceeds are intended to Maria Braguglia, Deputy State Advocate- finance the system of aids at issue and General; and by the Commission of the there is no question of any other use; the European Communities, represented by second is fulfilled only if the advantage its Legal Adviser, Cesare Maestripieri, secured for the domestic product makes acting as Agent. good in its entirety the charge paid by

are not intended exclusively to finance vations submitted to the the aid to the processing industry (see Court Article 6 of CIP Order No 1195/68, listing the uses to which the payments The plaintiff in the main action cites are to be put). Among the uses to which three judgments of the Court which are the surcharge was put, a major relevant to consideration of the first proportion arises from the total of question referred to the Court for a supplementary payments made to beet preliminary ruling: the Judgment of 25 producers.

JUDGMENT OF 25. 5. 1977 — CASE 105/76

sugar. More specifically, as regards the organization of the markets. 1975/1976 marketing year, the surcharge applied to domestic production (of sugar) Finally, the plaintiff in the main action is estimated at approximately 75 milliard suggests that the questions referred to the lire, whereas the aids for domestic Court for a preliminary ruling should be production amount to 28 milliard lire. answered as follows: 1. Article 13 (2) of the EEC Treaty It is clear from the opinion of the cannot be interpreted as making Advocate-General in the IGAV cast that subject to the prohibition of charges

INTERZUCCHERI v REZZANO E CAVASSA

the main action submits figures relating to the proceeds of the surcharge and to Once the measure had been adopted, the payments out of the Sugar Equalization tax on sugar could only be applied on all Fund. sugar consumed in Italy whatever its origin; to impose the charge on the First question domestic product alone would have amounted to fixing a higher price for the Consideration of the origin and purpose domestic product than that for the of the surcharge should suffice to remove imported product, with all the ridiculous the doubts raised concerning its results which would ensue. compatibility with Article 13 (2) of the EEC Treaty. The intervener adds that in If the Italian authority were compelled to its judgment in Capolongo, referred to revoke the surcharge on sugar it would, above, the Court emphasized that the in order to finance the adaptation aids, extension of the concept of 'charges which continue to be essential, be having an effect equivalent to a customs compelled to go elsewhere for the duty' to an internal levy imposed both on necessary funds amounting to more than domestic products and imported a hundred milliard lire per year — which products implies a substantial stretching would be impossible in the present of the law. But this possibility is out of condition of the State's finances. In any the question in the present case. The case, the existence of the surcharge had intention which the Italian Government no restrictive effect whatever on imports followed in introducing the surcharge on into Italy of sugar coming from the other sugar was to finance, in a way which, Member States. from the economic and fiscal point of view, it considered to be the most On the contrary those imports have suitable, the adaptation aids expressly increased enormously, inasmuch as they authorized by the basic regulation. Faced more than make up for the whole of the with the choice between a general charge amount by which production falls short to be borne by the population as a whole of national consumption. and a duty imposed on the consumers of the particular product, the Government An examination of the case-law of the consciously chose the second method. Court confirms that the surcharge does This choice of fiscal policy, which not come within even an extended certainly does not fall outside the concept of 'charge having equivalent province reserved to the authority of the effect'.

The intervener in the main action refers organization of the markets and, to the judgment in the Capolongo case, secondly, because the surcharge, which mentioned earlier, in which the Court was introduced in order to finance the ruled that 'a duty falling within a general authorized adaptation aids, does not system of internal taxation applying pursue substantially different objectives systematically to domestic and imported or perform a different function from products according to the same criteria those appropriate to those aids, the very can nevertheless constitute a charge purpose of which is to reduce the having an effect equivalent to a customs recognized basic disparity between Italian duty on imports when such duty is producers an producers in the other intended exclusively to support activities Member States. which specifically benefit the taxed domestic product'. The Government of the Italian Republic considers that the origin, structure and This principle was reaffirmed in the working of the ordinary surcharge enable judgment in IGAV which emphasized the first question submitted for a that a definition in the sense indicated preliminary ruling to be answered wholly requires a clearly established connexion in the negative. The surcharge is a fiscal between, on the one hand, the collection measure imposed by the State in order to of a fiscal charge levied without offset increases in the cost of production distinction on all the products in of home-produced sugar to meet question and, on the other hand, the use industrial and structural difficulties of the proceeds from it for the exclusive recognized by the Community and benefit of the domestic products. within the limits authorized by it. It affects home-produced sugar and In the case of the surcharge the domestic imported sugar in the same way, to the product subject to the charge (sugar) is same extent and under the same not the same as the domestic product conditions; it is to be paid by the benefiting from the aid (either sugar or, consumer and forms an integral part of to a greater extent, beet). Moreover the the price. As regards imported sugar, the proceeds from the levy are not surcharge is imposed because this sugar exclusively assigned to sugar producers is consumed in Italy and not because or but also and to a greater extent to beet as a result of crossing the frontier and producers. this makes it impossible to describe the ordinary surcharge as a charge having an Obviously, therefore, the conditions of effect equivalent to a customs duty. exclusive use and specific benefit are not fulfilled. Since the surcharge consists of an internal levy imposed both on the Once it has been shown that the domestic and the imported product, it surcharge on sugar cannot be described cannot be regarded from the point of as a charge having an effect equivalent to view of the principle of a customs duty, Questions 2 and 3 no non-discrimination provided for in longer arise. Article 95 of the EEC Treaty.

are not present in the case of the surcharge. The Community did no more ordinary surcharge on imported sugar. In than authorize Italy to grant adaptation the first place, the proceeds of the aids but it did not adopt any provisions surcharge on imported sugar are in laying down detailed rules for payment themselves insufficient to finance the of the aids and the system of financing. subsidies to beet producers and to the processing industry. This is, therefore, far The reply given to the first question from being a case where, in effect, the submitted for a preliminary ruling means charge is applied exclusively on the that Questions 2 and 3 no longer arise. imported product. On the contrary, it is also applied, and to a greater extent, to Nevertheless on the question of the right home-produced sugar because the to reimbursement of sums paid in consumption of the domestic product is respect of charges subsequently held to much greater than that of the imported have an effect equivalent to a customs product. In connexion with this second duty, the Italian Government refers to point it must be borne in mind that the the written observations which it subsidies in question are lawful and submitted in Case 33/76, RE WE v authorized by the Community. Landwirtschaftskammer (Judgment of the Court of 16 December 1976 [1976] The Italian Government adds the ECR 1989). following points. Article 6 of CIP Order No 1195 shows that when the surcharge Fourth question on sugar was introduced the proceeds from it were also devoted to purposes Apart from the fact that reference to other than the financing of aids Article 40 is irrelevant (see the authorized by the Community. Some of observations in Case 77/76) it must be these purposes were temporary pointed out that the existence of requirements consequent upon the discrimination can be presumed only where the same situations are treated introduction of the common

JUDGMENT OF 25. 5. 1977 — CASE 105/76

no surcharge) the imported product were comparison between the levy imposed on available on the Italian market at a lower the domestic product and the aid which price it would be impossible to satisfy it receives requires, in each case, an the need for protection, with the result appraisal of the advantages enjoyed by all that there would be discrimination the products concerned in the against the domestic product and its manufacture of the product in question. potential consumers. Before these advantages can be assessed, account must also be taken of any levies The Commission also refers to the which may be imposed on these decisions of the Court in Cases 77/72 products. In the Commission's view this and 94/74, cited above. is not an occasion for doing violence to concepts of law and, since the two It is clear from the latter of these provisions are directly applicable, judgments that the definition of a charge creating uncertainty about the limits which prima facie appears to be an within which Articles 13 and 95 of the internal charge as a charge having an EEC Treaty apply. With regard to the effect equivalent to a customs duty clarity of these concepts, the requires a clearly established connexion Commission refers to the comments between, on the one hand, the collection made by the Advocate-General in his of a fiscal duty levied without distinction opinion in the IGAV case. on the products in question and, on the other hand, the advantage enures for the The decisions referred to above cannot exclusive benefit of the domestic product apply where the 'use' to which the levy is by the proceeds of that duty. In the put is not exclusive and where the present case the conditions laid down by charges imposed on the domestic the Court are not fulfilled because: product are only offset in part with the — The domestic product taxed is not result that, because of the levy in the same as the domestic product question, the imported product is subject receiving the advantage; to a charge greater than that applied to — Revenue from the charge is not used the domestic product, which conflicts for the exclusive benefit of the sugar with the provisions of Article 95 of the industry. Treaty.

The Commission submits that the III — Oral procedure question should be answered as follows: The plaintiff and the intervener in the main action, the Government of the A levy which forms part of a general system of internal taxation applied, Italian Republic and the Commission of subject to identical criteria, equally to the European Communities submitted domestic and imported products may oral observations at the hearing on 22 March 1977. constitute a charge having an effect equivalent to a customs duty on imports if it is used for the sole purpose of The Advocate-General delivered his

financing activities for the specific opinion at the hearing on 3 May 1977.

Decision

1 By order of 21 October 1976, received at the Court Registry on 28 October 1976, the Pretura di Recco referred to the Court four questions concerning the interpretation of Article 13 (2) of the Treaty and of Council Regulations No 1009/67/EEC of 18 December 1967 and No 3330/74 of 19 December 1974 on the common organization of the market in sugar (OJ, English Special Edition 1967, p. 304, and OJ L 359 of 31. 12. 1974, p. 1). These two questions are submitted in connexion with proceedings between two Italian undertakings.

2 Interzuccheri, the plaintiff in the main action, sold 10 000 kilogrammes of sugar to Ditta Rezzano e Cavassa, the defendant in the main action, and the latter refused to pay the part of the purchase price representing the charge called the surcharge (sovrapprezzo), paid on the goods by the plaintiff in the main action, on the ground that this tax was incompatible with Community provisions. Interzuccheri thereupon applied to the Pretore for an order that the defendant should pay the sum in question. On 21 October 1976 the Associazione Nazionale tra gli Industriali dello Zuccheri, del Lievito e dell'Alcool ('Assozucchero') applied to intervene in the case in support of the plaintiff and claimed that the objections raised by the defendant should be dismissed.

II — The questions relating to the surcharge

6 The first question is whether Article 13 (2) of the Treaty and Article 21 (2) of Regulation (EEC) No 3330/74 and Article 20 (2) of Regulation No 1009/67/EEC prevent the application, in trade between the Member States on the market in sugar, of a national measure imposing a charge on any quantity

INTERZUCCHERI v REZZANO E CAVASSA

of sugar, whether home produced or imported, the proceeds of which are used for the exclusive benefit of national sugar refineries and beet producers.

7 Article 9 of the Treaty, which at the material time was the same as the Article 13 referred to in the question, prohibits the imposition of customs duties on imports of all charges having equivalent effect in trade between Member States. Likewise Article 20 (2) of Regulation No 1009/67/EEC and Article 21 (2) of Regulation (EEC) No 3330/74 prohibit, save as otherwise provided in those regulations or by derogation determined by the Council, the levying of any customs duty or charge having equivalent effect.

8 As was ruled in the judgments of 19 June 1973 (Case 77/72, Capolongo [1973] ECR 611) and of 18 June 1975 (Case 94/74, IGAV [1975] ECR 699), the prohibitions contained in Articles 9 and 13 are aimed at any tax demanded at the time or by reason of importation and which, being imposed specifically on imported products to the exclusion of the similar domestic product, results in the same restrictive consequences on the free movement of goods as a customs duty by altering the cost price of that product. On the other hand, the fact that a charge is applied without distinction to domestic products as well as to products from other Member States gives rise to the question whether the taxation at issue falls within the prohibition in Articles 9 and 13 or the rule against discrimination in matters of internal taxation laid down by Article 95.

11 It is therefore for the national court to establish the existence or otherwise of this connexion and to take into account, in the circumstances, the fact that, according to the information on the file, it appears that the revenue produced by the imposition of the contested charge benefits beet-producers as well as the processing industry in such a way that sugar, as a product distinct from beet, only receives less than half of the funds collected.

12 It follows from the foregoing that the answer to the first question must be that a duty falling within a general system of internal taxation applying to domestic products as well as to imported products according to the same criteria can constitute a charge having an effect equivalent to a customs duty on imports only if it has the sole purpose of financing activities for the specific advantage of the taxed domestic product; if the taxed product and the domestic product benefiting from it are the same; and if the charges imposed on the domestic product are made good in full.

13 In these circumstances the second and third questions, which depend on an affirmative answer to the first, no longer arise.

14 The fourth question is whether the application of a pecuniary charge such as that referred to in the first question constitutes an infringement of the prohibition of discrimination between producers or consumers laid down in the second subparagraph of Article 40 (3) of the Treaty. In this connexion it is sufficient to note that the prohibition of any discrimination between the products of other Member States and similar domestic products, laid down in Article 95 of the Treaty, enables any infringement of fundamental Community principles in the matter referred to by the national court to be more specifically identified. In consequence there is no need to answer this question either.

in answer to the questions referred to it by the Pretura di Recco by order of 21 October 1976 hereby rules:

A duty falling within a general system of internal taxation applying to domestic products as well as to imported products according to the same criteria can constitute a charge having an effect equivalent to a customs duty on imports only if it has the sole purpose of financing activities for the specific advantage of the taxed domestic product, if the taxed product and the domestic product benefiting from it are the same, and if the charges imposed on the domestic product are made good in full.

Kutscher Donner Pescatore Mertens de Wilmars Sørensen

Mackenzie Stuart O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 25 May 1977.

A. Van Houtte H. Kutscher