C-87/78

(EEC Treaty, Art. 190)

1. The use of flat-rate methods to Article 190 of the Treaty depends on ascertain the sucrose content to be the nature of the measure in question. taken as a basis for the calculation of In the case of a regulation the the levy applicable to certain products preamble thereto may be confined to covered by the common organization indicating the general situation which of the markets in sugar is valid subject led to its adoption and the general to the two conditions that the sucrose objectives which it is intended to content including other sugars achieve. Consequently it is not expressed as sucrose remains the possible to require that it should set principal factor in the calculation of out the various facts, which are often the levy and that such methods are very numerous and complex, on the neither inappropriate nor give rise to basis of which the regulation was instance of demonstrable unfairness. adopted, or a fortiori that it should 2. The extent of the duty to provide a provide a more or less complete statement of reasons prescribed in evaluation of those facts.

In Case 87/78

REFERENCE to the Court under Article 177 of the EEC Treaty by the IVth Senate of the Finanzgericht (Finance Court) Hamburg for a pre­ liminary ruling in the action pending before that court between

I — Language of the Case: German.

JUDGMENT OF 30. II. 1978 — CASE 87/78

Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the from the Zollamt (Customs Office) procedure and the observations Hamburg for certain quantities of submitted pursuant to Article 20 of the "maltrin 10" and "maltrin 20". The Protocol on the Statute of the Court of customs services classified these goods as Justice of the European Communities "other sugars" falling under tariff may be summarized as follows: heading 17.02 D ("other sugars and syrups") of the Common Customs Tariff and, after taking a sample, issued pro­ I — Facts and procedure visional decisions assessing the levy and the monetary compensation. After the On 12 October 1976 the Welding under­ goods had been examined by experts and taking of Hamburg, the plaintiff in the the initial decision amended, the customs main action, obtained customs clearance services, by successive decisions of 4

WELDING v HAUPTZOLLAMT HAMBURG-WALTERSHOF

The Lane and method (copper reduction method) from Eynon method laid down in the first the solution inverted according to subparagraph of Article 7 (2) of Regu Clerget-Herzfeld. The total sugar lation (EEC) No 837/68 for determining content determined according to this the sucrose content is not suitable for method shall be converted into sucrose goods containing less than 30 % by multiplying by the coefficient 0.95. dextrose equivalent.

Hamburg on 1 November 1977. It whereby the calculation of the levy is claimed that the fixing of the import based on the total sugar content levies on the basis of a sucrose content of expressed as sucrose should not have 94.7 % and 95.6 % gives an absurd been overlooked; the "dry matter result. If the findings of the content" mentioned in the second Zolltechnische Prüfungs-und Lehranstalt sentence can only be understood as the (Testing and Training Institute for "sucrose content of the dry matter" or Customs Technology) are adopted for a the absurd situation will arise whereby a dextrose content of 11.6% or 18.2% heavier charge is imposed on products the imported product in its entirety which have a lower sucrose content — would in practice be subject to the levy less than 85 % — that on products with and to the monetary compensatory a higher content — more than 85 %.

The Hauptzollamt relied upon what it sucrose content and the levy on white considers the clear meaning of the sugar; the second subparagraph of second subparagraph of Article 7 (2) of Article 7 (2) of Regulation No 837/68 Regulation No 837/68 as amended by renders subject to the levy applicable to Regulation No 878/69 and contended sugar constituents of a product other than those mentioned in the rule for the that the application should be dismissed. treatment, for example, of dextrin falling The Finanzgericht Hamburg stayed the under tariff heading 35.05. proceedings by an order of 15 March 1978. The "doubts" of the Finanzgericht 3. This may constitute inequality and concerning this case may be summarized thus amount to discrimination within the as follows from the statement of reasons for the said order: meaning of the second subparagraph of Article 40 (3) of the EEC Treaty since 1. According to Article 15 (5) of Regu­ lighter charges are imposed on separate lation No 3330/74 of the Council (the imports of dextrin and maltose than on former Article 14 (5) of Regulation No imports of a mixture of the two products. 1009/67) there is a common organi­ zation of the market in sugar entailing 4. The validity of the second subpara­ the charging of a levy which must be graph of Article 7 (2) must also be calculated as a flat rate on the basis of questioned because no reasons are given the actual content, or the content for the derogation which it constitutes expressed as sucrose and of the levy on from the first subparagraph (judgment of white sugar. The first subparagraph of 4 July 1963 in Case 24/62 [1963] ECR Article 7 (2) of Regulation No 837/68 63).

On the basis of these grounds the Finanz­ Justice. gericht Hamburg referred the following The Court, having heard the report of preliminary questions to the Court of the Judge-Rapporteur and the views of Justice: the Advocate General, decided by an "1. Is the second subparagraph of order of 12 July 1978 to assign the case to the Second Chamber. Article 7 (2) of Regulation (EEC) No 837/68 of the Commission of 28 June 1968 as amended by Regulation (EEC) No 878/69 of the II — Summary of the written observations submitted pur­ Commission of 12 May 1969 invalid suant to Article 20 of the because, by way of derogation from Protocol on the Statute of the first subparagraph of Article 7 the Court of Justice (2) of Regulation (EEC) No 837/68, the sucrose content, including other sugars expressed as sucrose, of The Commission of the European Communities recalls first the facts of the products containing less than 85 % sucrose and invert sugar expressed as original dispute. It then proceeds to the sucrose is to be determined without legal consideration of the problems regard to the actual sucrose content raised in the questions submitted. including other sugars expressed as It makes the initial remark that the sucrose by ascertaining the dry contested provision has been applied matter content? without difficulty for almost ten years and states that the rules of which it 2. If Question 1 is answered in the affir­ mative: In calculating the levy and forms part were only enacted after monetary compensation in cases scrupulous consideration and consul­ under the second subparagraph of tation with an expert whose opinion it Article 7 (2) of Regulation (EEC) produces. No 837/68 are the national auth­ With regard to the first preliminary orities entitled to adopt as a basis the question the Commission then actual sucrose content, including endeavours to justify the method of other sugars expressed as sucrose, calculating the levy and to counter the determined by methods of analysis other reasons for the invalidity of the other than those laid down by the disputed provision mentioned in the first subparagraph of Article 7 (2) or order. is it for the Community legislature to It recalls first of all the factual basis of specify the method of analysis for the problem. Maltrose is a sugar which the cases covered by the second falls under tariff heading 17.02 D of the subparagraph of Article 7 (2)?" Common Customs Tariff; dextrin, a starch degradation product, is included The order of the Finanzgericht Hamburg under tariff heading 35.05 but, according was received at the Court Registry on 29 to Note 2 to Chapter 35, dextrin is to be March 1978. considered as a starch degradation The Commission of the European product with a reducing sugar content Communities represented by Mr (sugars which reduce cupric salts in an

alkaline solution from a higher level of which moreover rarely occur in inter oxidation to a lower — glucose, national trade, in particular simple sugars fructose, maltose, galactose, lactose, etc. such as glucose, fructose, hexose, and which can thus be identified) pentose, etc. Since for such products expressed as dextrose (chemically pure there is no more accurate alternative glucose) on the dry substance not method the second subparagraph of exceeding 10 %. The malto-dextrins Article 7 (2) adopts the dry matter having a higher reducing sugar content content as the basis. fall under heading 17.02. This objective method has not given rise Since the imported goods, "maltrin 10" to difficulties in its application.

Common Customs Tariff. This means that imports of maltose and of dextrin that the goods as a whole are to be separately and not as a mixture are not classified in heading 17.02 D of the taxed so heavily does not follow from Common Customs Tariff and must the provision in dispute but from the accordingly be treated as sugar. definition of dextrin given in the Common Customs Tariff itself; such The levy on sugar is calculated in accordance with the method described in cases are inevitable since any classi Article 15 (5) of Regulation No 3330/74 fication of necessity entails drawing and in Article 7 of Regulation No dividing lines.

However current techniques of sugar which increases the initial sucrose analysis do not permit the sucrose content by some 5 % and occurs in the content to be calculated in accordance application of the Lane and Eynon with the uniform method for all sugar. method recommended where the said That is why the Commission, when it first subparagraph applies; the coefficient adopted Regulation No 837/68, found it returns the content to its initial value. necessary to prescribe different methods The method recommended in the second depending on the composition of the subparagraph does not entail any over product for determining the total sugar estimate of the content and thus need

WELDING v HAUPTZOLLAMT HAMBURG-WALTERSHOF

The tations. It is accordingly unobjectionable second subparagraph of paragraph 2 that the relevant recital to Regulation only lays down another method of calcu No 837/68 merely stated "To avoid lating the sucrose content, including distortions of competition, it is necessary others sugars expressed as sucrose, to specify in respect of these products the differing from the method laid down in method by which sucrose content . . . is the first subparagraph. The concept of to be determined". "dry matter content" referred to, in the first sentence of the second subparagraph Furthermore the second subparagraph of must, on a logical interpretation, be read Article 7 (2) as amended does not as meaning "the dry matter content in constitute a derogation from Article 15 sucrose including other sugars expressed

consideration to an expert at a time Commission of 28 June 1968." when the goods in question were not yet The plaintiff in the main action has convered by an organization of the delivered a copy of the statement which market in sugar. The Commission and its it has addressed to the Finanzgericht in expert had been concerned to save the main action together with technical the customs authorities additional, information on the Somogyi method of. complicated work which is the reason of calculating sugar contents in maltose and the adoption of a flat-rate method which cereal derivatives. should now have been replaced by a

3 The defendant, in calculating the amount of the levy, employed the method prescribed by the second subparagraph of Article 7 (2) of Regulation No 837/68 as amended by Regulation No 878/69 whereby the sucrose content, including other sugars expressed as sucrose, of products containing less than 85% sucrose and invert sugar expressed as sucrose, is determined by ascer­ taining the dry matter content; this latter content is determined according to the specific gravity of the solution diluted in a proportion of one to one by weight and, for solid products, by drying and when expressed as sucrose by multiplying by the coefficient 1.

WELDING v HAUPTZOLLAMT HAMBURG-WALTERSHOF

4 The national court has doubts regarding the validity of the method of determining the criteria adopted for calculating the levy which entails extending the levy applicable to sugar to the constituents of a product other than those mentioned in the enabling provision in Article 14 (5) of Regu­ lation No 1009/67/EEC of the Council of 18 December 1967 on the common organization of the market in sugar (Official Journal, English Special Edition 1967, p. 304) as amended by Article 15, (5) of Regulation No 3330/74 of the Council of 19 December 1974 (Official Journal L 359, p. 1) which provides that the levy shall be calculated, where appropriate, at a standard rate on the basis of the sucrose content (including other sugars expressed as sucrose) of the product concerned.

The national court deduced from this that since, according to Article 155 of the Treaty, the Commission can exercise only the powers conferred upon it by the Council for the implementation of the rules laid down by the latter, the Commission may have exceeded its powers by substituting its method of calculating the levy for that clearly established by the Council.

JUDGMENT OF 30. II. 1978 — CASE 87/78

This means that "maltrin 10" and "maltrin 20" must be treated as sugar and the appropriate levy to be applied must be calculated in accordance with the principle at present laid down in Article 15 (5) of Regulation (EEC) No 3330/74 of the Council and the methods determined earlier by Article 7 of Regulation (EEC) No 837/68 of the Commission which constitutes a provision in implementation of the said paragraph 5.

6 Since Article 15 (5) of Regulation (EEC) No 3330/74 provides that "the levy on the products listed in Article 1 (1) (d) shall be calculated, where appro­ priate, as a flat rate on the basis of the sucrose content (including other sugars expressed as sucrose) of the product concerned and the levy on white sugar" the use of the words "on the basis of" shows that the Council has ruled out the need, in all cases, for the actual sucrose content of the various products to correspond exactly to the amount of the levy applicable to them.

Article 15 thus permits the adoption of other criteria for the products listed in Article 1 (1) (d) than those prescribed for the other sugars.

The application of such criteria, which is unavoidable in a flate-rate method, may prove necessary with regard to certain products in so far as it is impossible for technical or practical reasons precisely to determine the composition of such products.

The use of such methods of calculation is valid subject to two conditions: first, that the sucrose content including other sugars expressed as sucrose remains the principal factor in the calculation of the levy and secondly that such methods are either inappropriate nor give rise to instances of demonstrable unfairness.

Furthermore no proof sufficient in law has been provided that the flat-rate method has given rise to serious discrimination and that significant disturb­ ances of the malto-dextrin market have been caused.

It has not even been alleged that the operation for many years of the method in dispute has given rise to any difficulty whatever.

Thus the second condition is also fulfilled.

These considerations show that the adoption of the method in question for the calculation of the levy applicable to the relevant products does not entail any infringement of the restrictions on the powers delegated by the Council.

8 With regard to the complaint of infringement of the second subparagraph of Article 40 (3) of the Treaty, on the ground that traders who import the constituents of the product separately, that is to say dextrin and maltose, pay lower duties than traders who import the said constituents ready mixed, it must be observed on the one hand that such alleged unfavourable treatment of importers of malto-dextrose in relation to those who import maltose or dextrin separately does not constitute a discrimination at the expense of specified persons or of a group or category and that anyone may freely choose to import the two substances separately and on the other that the result complained of does not originate from the second subparagraph of Article 7 (2) of Regulation (EEC) No 837/68 but from the definition of dextrin according to the Common Customs Tariff.

It follows that the prohibition of discrimination laid down in the second subparagraph of Article 40 (3) for the Treaty has not been infringed.

Specific reasons cannot be required for all the details which may be found in such a measure since they form part of the systematic framework of the enactment of the detailed rules for the application of the levies on sugar, a fact which cannot be contested in the present case since the objective of the said measure was to close a gap giving rise to uncertainty regarding the method of calculating the levy on certain products to which the basic provision applied and since the statement of all the reasons for choosing specific methods would have required a detailed scientific treatise.

It is a question in the present case of a regulation, that is to say, a measure intended to have general application, the preamble to which may be confined to indicating the general situation which led to its adoption, on the one hand, and the general objectives which it is intended to achieve on the other.

Consequently it is not possible to require that it should set out the various facts, which are often very numerous and complex, on the basis of which the regulation was adopted, or a fortiori that it should provide a more or less complete evaluation of those facts.

Accordingly the validity of Regulation (EEC) No 837/68 cannot be called in question on the ground of failure to specify the reasons on which it is based.

12 Furthermore it does not appear from the file that the Court of Justice should of its own motion find any other ground of invalidity and consideration of the file has disclosed no factor of such a kind as to affect the validity of Article 7 (2) of Regulation (EEC) No 837/68 of the Commission of 28 June 1968 on detailed rules for the application of levies on sugar as amended by Regulation (EEC) No 878/69 of the Commission of 12 May 1969.

THE COURT (Second Chamber)

in answer to the questions referred to it by the Finanzgericht Hamburg by an order of 15 March 1978 hereby rules:

Consideration of the second subparagraph of Article 7 (2) of Regulation (EEC) No 837/68 of the Commission of 28 June 1968 on detailed rules for the application of levies on sugar (Official Journal, English Special Edition 1968 (I), p. 221), as amended by Regulation (EEC) No 878/69 of the Commission of 12 May 1969 (Official Journal, English Special Edition 1969 (I), p. 216) has disclosed no factors of such a kind as to affect the validity of that provision.

Mackenzie Stuart Sørensen Touffait

Delivered in open court in Luxembourg on 30 November 1978.

A. Van Houtte A. J. Mackenzie Stuart Registrar President of the Second Chamber