C-119/78

DIRECTEUR DES SERVICES FISCAUX DE LA HAUTE-SAÔNE ET DU TERRITOIRE DE BELFORT, Vesoul,

on the interpretation of Articles 10 and 30 to 37 of the EEC Treaty,

THE COURT

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

Advocate General : H. Mayras Registrar: A. Van Houtte

gives the following

The order for reference and the written applicable since they were incompatible observations submitted pursuant to with the provisions of Community law Article 20 of the Protocol on the Statute and in particular with Article 7 of the of the Court of Justice of the EEC may EEC Treaty (adjustment of commercial be summarized as follows: monopolies). After deciding that oranges steeped in alcohol and imported from Italy were I — Facts and procedure "raw material" within the meaning of Article 268 of Annex II to the Code Article 268, enacted by Decree No Général des Impôts and thus accepting, 74/91 of 6 February 1974 (Journal at least by implication, that the product Officiel de la République Française of 8 fell within the prohibition on distillation February 1974), of Annex II to the Code provided for in that Article on the same Général des Impôts provides: basis as all other raw material not "distillation of all imported raw material, covered by the exceptions expressly with the exception of fresh fruit other mentioned therein, the national court than apples, pears or grapes shall be referred the following question to the prohibited". Court of Justice for a preliminary ruling At the beginning of 1976 the Peureux under Article 177 of the Treaty: "Is the company, the plaintiff in the main prohibition in France on the distillation action, imported from Italy oranges of spirits from any imported raw steeped in alcohol, and by letter of 24 material, with the exception of fresh fruit October 1976 asked the Administration other than apples, pears and grapes des Contributions Indirectes [Indirect (Article 268 of Annex II to the Code Taxation Department], the defendant in Général des Impôts), compatible with the main action, to confirm its right to Articles 10 and 37 or any other provision distil these products. By letter of 1 of the Treaty of Rome on the free March 1977 the said administration movement and circulation of products replied that the provisions of Article 268 coming from third countries, in of Annex II to the Code Général des particular as regards the distillation of spirits from oranges steeped in alcohol Impôts prevented compliance with the coming from Italy?" request since the imported oranges were not fresh fruit as they were steeped in The judgment of 21 April 1978 making alcohol. the reference was registered at the Court of Justice on 19 May 1978. In In the Tribunal de Grande Instance, accordance with Article 20 of the Lure, before which the action was Protocol on the Statute of the Court of brought, the plaintiff in the main action Justice of the EEC the plaintiff in the alleged in the first place that the main action and the Commission imported product (oranges steeped in submitted written observations. alcohol) was not raw material within the meaning of the national provisions in question and alternatively in any event the national provisions were not

After hearing the report of the Judge- originating in third countries have been Rapporteur and the views of the added in the manufacture of goods orig­ Advocate General, the Court decided to inating in another Member State, Article open the oral procedure without any 16 of Regulation No 516/77 of 14 preparatory enquiry. March 1977 on the common organ­ ization of the market in products processed from fruit and vegetables II — Observations under Article (Official Journal 1977 L 73, p. 1) 20 of the Protocol on the provides by implication that goods Statute of the Court of obtained from products in free circu­ Justice of the EEC lation are to be admitted to free circu­ lation within the Community. A — Observations of the plaintiff in the The plaintiff in the main action main action - accordingly takes the view that products in free circulation in a Member State of Taking the view that the Court in giving preliminary rulings under Article 177 of the Community which have either been completely obtained in a third country or the Treaty cannot rule on the interpre­ tation and validity of national provisions, have been prepared from products orig­ the plaintiff in the main action proposes inating in third countries must be admitted to free circulation between the to read the question from the court making the reference as follows: Member States, subject only to the protective commercial measures auth­ "Should Articles 10 and 37 of the EEC orized by Article 115 of the Treaty. Treaty or any other provision of the Treaty on the free movement and circu­ Article 37 of the EEC Treaty lation of products coming from third Article 268 of Annex II to the Code countries be interpreted as meaning that Général des Impôts prohibits the no national provision or measure is distillation of certain imported raw allowed prohibiting the distillation of material; the prohibition is pan of the certain raw material imported from other economic system for alcohol which Member States of the EEC, such as prohibited the import of pure alcohol oranges steeped in alcohol coming from and then in a supplemental provision Italy?" prohibited the import of raw material for making alcohol. Article 37 of the Treaty Article 10 of the EEC Treaty provides that Member States shall adjust In referring to Article 10 on products any State monopolies of a commercial coming from third countries and in free character. The Court held in Case 59/75 circulation in a Member State the Pubblico Ministero v Manghera [1976] 1 national court was querying whether ECR 91 (judgment of 3 February 1976) restrictive measures on the import of that it follows from Article 37 and its goods originating in third countries were structure "that the obligation laid down compatible with the Treaty. in paragraph (1) aims at ensuring In the present case the oranges steeped compliance with the fundamental rule of in alcohol and imported into France orig­ inated in Italy or had been imponed and then prepared in that Member State and accordingly were in free circulation there. As regards goods in free circu­ lation Article 9 (2) of the Treaty provides for the application of Articles 30 to 37 of the Treaty. Where products

the free movement of goods throughout trading rules enacted by Member States the Common Market, in particular by which are capable of hindering, directly the abolition of quantitative restrictions or indirectly, actually or potentially, and measures having equivalent effect in intra-Community trade are to be trade between Member States. This considered as measures having an effect objective would not be attained if, in a equivalent to quantitative restrictions. It Member State where a commercial also cites Commission Directive of 7 monopoly exists, the free movement of November 1966, No 66/683, on the goods from other Member States similar abolition of all difference in treatment to those with which the national between national products and products monopoly is concerned were not which under Articles 9 and 10 of the ensured". Treaty must be allowed into free circu­ Further the Court took the view in Case lation (Journal Officiel 1966, p. 3748) and in particular Article 1 (a) thereof to 91/75 Miritz [1976] 1 ECR 217 argue that the prohibition in question (judgment of 17 February 1976) that constitutes a quantitative restriction on "Article 37 (1) is not concerned trade. The plaintiff in the main action exclusively with quantitative restrictions cites the judgment of 16 March 1977 in but prohibits any discrimination, when Case 68/76 Commission v French the transitional period has ended, Republic, "Potatoes", [1977] 1 ECR 515 regarding the conditions under which and adds that the fact that a national goods are procured and marketed between nationals of Member States. It economic system for a product should have been replaced by a Community follows that its application is not limited system and this has not been done does to imports or exports which are connected with its existence and affect not justify the maintenance of obstacles to trade until the entry into force of such trade between Member States in certain a system. Since the prohibition in Article products, whether or not subject to the 30 et seq. of the Treaty is no longer monopoly …". subject after 31 December 1969 to the The plaintiff in the main action infers derogations in Article 37 (4) of the from this case-law that since the Treaty, the plaintiff in the main action prohibition on distilling certain raw concludes that since the end of the material is clearly connected with the transitional period Articles 30 et seq. of existence of the monopoly it is an the Treaty no longer allow a Member obstacle to import from other Member State to prohibit the complete or partial States and accordingly discrimination in use of a product from another Member the conditions of supply in so far as the State of the EEC. same raw material of French origin can be freely distilled.

It accordingly proposes that the answer still has the exclusive right to produce to the question raised should be that alcohol reserved for the State, under "Articles 30 to 37 of the EEC Treaty Article 222 of the Treaty this right as must be interpreted as meaning that as such is compatible with the Treaty as is from the end of the transitional period the exclusive right for a State to market national provisions or measures limiting its own production. Such an exclusive or prohibiting the complete or partial use right is no longer a monopoly of a of products originating in another commercial nature within the meaning of Member State or in free circulation there Article 37 unless it extended to imported constitute measures having an effect products originating in other Member equivalent to a quantitative restriction States, which is not the case. The Service and prohibited by the said Articles". des Alcools therefore no longer has exclusive right to import, export and market in relation to alcohol reserved to B — Observations of the Commission of the European Communities the State. Since such rights are the very essence of the monopoly their disap­ After referring to the history of the case pearance will necessarily involve the the Commission observes that it has disappearance of the latter. Even if initiated a procedure against the French Article 268 of Annex II to the Code Republic for failure to fulfil an Général des Impôts could be regarded as obligation, with a view to its abolishing concerning the rules relating to the the prohibition in question on distilling monopoly nevertheless as from the end certain raw material imported from other of the transitional period it has to be Member States. considered in relation to Article 30 of the Treaty. Turning to consideration of the question raised the Commission observes in the Article 30 of the Treaty first place that it should be reworded. It adds that having regard to the wording In the Commission's view the national of the question which refers inter alia to court rightly observes that it would Article 10 of the Treaty on the entry into appear contradictory to allow oranges free circulation of products originating in steeped in alcohol to enter France and to third countries and to the recitals in the prohibit their distillation, for which order for reference, it will give its views purpose they seem normally to be on the compatibility of the provision in intended. By making it pointless to question with Community law not only acquire a product it is possible to restrict because the latter refers to products orig­ its import. inating in a Member State or in free Since the prohibition on distillation does circulation there but also because it not apply to raw material of national refers to products imported directly from origin the measure in question may be a third country. regarded as a measure having an effect equivalent to a quantitative restriction Article 37 of the Treaty In the Commission's view Article 37 of the Treaty is no longer applicable in the sector concerned because as a result of the adjustments made by Decree No 77/842 of 25 July 1977 (Journal Officiel de la République Française of 27 July 1977) alcohol no longer constitutes a commercial monopoly within the meaning of the article. Although France

within the meaning of Article 30 of the having equivalent effect shall be Treaty. In this respect it is right in the prohibited in trade with non-member Commission's view to stress that among countries. This prohibition applies to the the measures having an effect equivalent products in question as from 1 October to quantitative restrictions on imports the 1975 under the second paragraph of Commission Directive No 66/683 of 7 Article 9 of Regulation No 1927/75 of November 1966 lists provisions laid the Council of 22 July 1975 (Official down by law, regulation or Journal L 198, p. 7), which article is administrative action prohibiting the adopted in the consolidation represented complete or partial use of an imported by the said Regulation No 516/77. product in processing or incorporation. In view of the above observations the (Article 1). Commission suggests that the question The prohibition on measures having should be answered as follows: an effect equivalent to quantitative restrictions contained in Article 30 of the "The prohibition on distillation of Treaty applies only to products orig­ imported raw materials and in particular inating in a Member State or in free oranges steeped in alcohol originating in circulation there. It is therefore necessary a Member State or in a third country but also to consider the case of products in free circulation in another Member (here oranges steeped in alcohol) coming State has since 1 January 1970 been directly from a third country. The contrary to Article 30 of the EEC Commission observes that oranges Treaty. Such prohibition in so far as it steeped in alcohol come under heading relates to raw materials such as oranges No 20.06 B 1(e) of the Common steeped in alcohol imported from a third Customs Tariff and are therefore country has since 1 October 1975 also covered by the consolidated Council been contrary to Article 13 (2) of Regulation No 516/77 of 14 March Council Regulation No 516/77 of 14 1977 on the common organization of the March 1977." market in products processed from fruit The plaintiff in the main action, and vegetables (Official Journal L 73, p. represented by A. Tisserand of the 1). Article 13 (2) thereof stipulates that Belfort Bar, Vesoul, and P. Didier of the save as otherwise provided in the said Brussels Bar, and the Commission of the regulation or where derogation European Communities represented by therefrom is decided by the Council, its Agent, Mr Béraud, made oral obser­ acting on a proposal from the vations. Commission, the levying of any charge having equivalent effect to a customs The Advocate General delivered his duty and the application of any opinion at the hearing on 14 December quantitative restriction or measure 1978.

5 Article 268 is part of a set of provisions concerning the commercial monopoly in ethyl alcohol included essentially in the Code Général des Impôts (Book 1, Part 1, Title III, Indirect Taxation and Fiscal Monopolies, Chapter I, Section 1 (alcohol), Letter B, Economic System (Articles 358 to 399) and Annex II (Articles 268 to 275) to the Code).

6 According to Article 358 et seq. of the Code Général des Impôts the effect of the monopoly is that producers of ethyl alcohol established in France or at least in metropolitan France must reserve to the State their production of ethyl alcohol save certain alcohol expressly mentioned in that article.

PEUREUX v SERVICES FISCAUX DE LA HAUTE-SAÔNE ET DU TERRITOIRE DE BELFORT

7 The volume produced is determined by fixed annual quotas allocated, by the Minister responsible, to the manufacturers according to their technical capacity.

8 In return for the obligation on the producer to supply it, the monopoly has an obligation to buy the said alcohol at prices periodically fixed by order of the Minister for Finance.

9 The alcohol bought by the State is resold by it for all uses at fixed official prices.

"Is the prohibition in France on the distillation of spirits from any imported raw material, with the exception of fresh fruit other than apples, pears and grapes (Article 268 of Annex II to the Code Général des Impôts), compatible with Articles 10 and 37 or any other provision of the Treaty of Rome on the free movement and circulation of products coming from third countries, in particular as regards the distillation of spirits from oranges steeped in alcohol coming from Italy?"

15 It further appears from the judgment of the national court that criminal proceedings have been taken against the plaintiff in the main action for having disregarded the prohibition in question and that a penalty of FF 17 804 343.19 has been imposed for breach of the economic system for alcohol.

16 Although the Court has no jurisdiction under Article 177 of the Treaty to rule on the compatibility of a national provision with Community law, it may nevertheless, having regard to the particulars supplied by the national court, extract from the wording of the question the factors relating to the interpre­ tation of Community law.

17 Understood in this way the question comes in substance to asking whether Article 37 of the Treaty on the one hand and Article 30 together with Article 10 on the other allow a Member State which has a commercial monopoly in alcohol to maintain, or on the contrary prohibit it from maintaining, restrictions on distilling certain raw material suitable for processing into alcohol and imported from other Member States when similar raw material, in the present case oranges steeped in alcohol, produced in the territory of the same Member State, are not subject to such restrictions.

22 In prohibiting between Member States measures having an effect equivalent to quantitative restrictions on imports Article 30 of the Treaty covers all trading rules of Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.

23 Obstacles to intra-Community trade resulting from differences between the provisions of national laws which have not yet been harmonized in relation to the marketing and use of certain products constitute, in principle, measures having an effect equivalent to quantitative restrictions unless those provisions apply without discrimination to products imported from other Member States and to those produced or manufactured in the national territory.

Article 10 of the Treaty

24 Article 10 (1) provides "Products coming from a third country shall be considered to be in free circulation in a Member State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that Member

JUDGMENT OF 13. 3. 1979 — CASE 119/78

State, and if they have not benefited from a total or partial drawback of such duties or charges".

29 The question raised relates to a commercial monopoly specifically concerned with the obligation on national producers of certain alcohol to maintain production of such alcohol within the limits of annual quotas fixed by the public authority and to deliver their production only to the monopoly with the corresponding obligation on the monopoly to buy the said products at officially fixed prices.

PEUREUX v SERVICES FISCAUX DE LA HAUTE-SAÔNE ET DU TERRITOIRE DE BELFORT

30 It follows from the national character of the commercial monopolies referred to in Article 37 and the possibility of maintaining them after adjustment in accordance with the same provision that the fact that the obligation to deliver to the monopoly and the corresponding obligation on it to purchase concerns only national alcohol cannot be regarded as discrimination within the meaning of Article 37 (1) nor as a quantitative restriction within the meaning of Article 37 (2). However the prohibition on any discrimination between the nationals of Member States regarding the conditions under which goods are procured and marketed prevents a distinction from being made between the same kind of nationally produced alcohol according to whether it has been obtained from the distillation of national raw material or on the contrary by the distillation of raw material originating in another Member State.

31 This is all the more so when as a result of the system governing the monopoly the authorities of the Member State are entitled to fix annually the quantities of alcohol which may be produced and which must be delivered to the monopoly.

34 As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Tribunal de Grande Instance, Lure, by judgment of 21 April 1978, hereby rules:

1. A national provision prohibiting the distillation, for the purpose of manufacturing products reserved to a national commercial monopoly, of raw materials coming from other Member States constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty and a discrimination regarding the conditions under which goods are procured and marketed within the meaning of Article 37 (1) of the Treaty, where the prohibition does not apply to identical raw materials produced within the national territory.

2. There are no grounds for drawing a distinction between products duly put into free circulation in another Member State after having been imported from a third country and products originating in that Member State.