C-253/83

Hauptzollamt Mainz [Principal Customs Office, Mainz],

on the interpretation of Articles 37 and 95 of the EEC Treaty, Article 3 of the Agreement of 29 June 1970 between the EEC and Spain (Official Journal L 182, p. 4) and the first paragraph of Article 21 of the Agreement of 22 July 1972 between the EEC and the Portuguese Republic (Official Journal L 301, p. 165) with regard to the implementation of certain measures in the field of the Branntweinmonopolgesetz [Law on the Monopoly in Spirits] of 8 April 1922,

THE COURT (Fourth Chamber)

composed of: G. Bosco, President of Chamber, P. Pescatore, A. O'Keeffe, T. Koopmans and K. Bahlmann, Judges,

Advocate General: CO . Lenz Registrar: H. A. Rühl, Principal Administrator

gives the following

The facts of the case, the course of the Case 59/75, Pubblico Ministero v Manghera, procedure and the observations submitted [1976] ECR 91 and 17 February 1976 in pursuant to Article 20 of the Protocol on Case 45/75, Rewe-Zentrale v Hauptzollamt the Statute of the Court of Justice of the Landau/Pfalz, [1976] ECR 181, and Case EEC may be summarized as follows: 91/75, Hauptzollamt Göttingen v Miritz GmbH, [1976] ECR 217, spirits imported 1. Facts and procedure from other Member States could be marketed at lower prices than spirits 1.1. The German Law on the Monopoly in marketed by the monopoly. So, in order to Spirits (Branntweingesetz) of 8 April 1922 remain competitive, the Federal Monopoly was amended on a number of occasions. Administration was obliged to reduce its The version applicable at the material time selling price for spirits, as from 23 February applied to spirits a tax on consumption that 1976, by DM 150 per hectolitre of spirit; was levied in three different ways. yet it did not alter the normal selling price, which had been set at DM 1 833 per hectolitre of spirit in its notice of 10 1.1.1. Domestically-produced spirits had in September 1975. Consequently, the actual principle to be sold to the Federal selling price during the material period for Monopoly Administration (Bundes­ the purposes of the main proceedings (1 to monopolverwaltung) at an acquisition price 17 March 1976) came to DM 1 633 per for spirits (Branntweinübernahmepreis) hectolitre of spirit. which was calculated by reference to the basic price (Branntweingrundpreis) fixed by the Federal Monopoly Administration. In 1.1.2. Spirits which are exempted from the March 1976 the basic price was DM 253 per requirement to be sold to the Federal hectolitre of spirit. In accordance with Monopoly Administration or which, in Paragraph 84 of the Law on the Monopoly breach of that requirement, were not so sold in Spirits those spirits were liable to the tax were liable, pursuant to Paragraph 78 of the on spirits (Branntweinsteuer) — at the aforesaid Law, to a spirits surcharge (Brannt­ material time DM 1 500 per hectolitre of weinaufschlag). According to Paragraph 79 spirit. They were marketed by the Federal the surcharge corresponded to the Monopoly Administration at a price, known difference between the 'normal selling price as the normal selling price (regelmässiger and the basic price' for spirits, less the Verkaufspreis), which was made up of the average costs which the Federal Monopoly sum of the acquisition price, the tax on Administration saved by not taking delivery spirits and the administrative and operating of the spirits. By virtue of Paragraph 79 (2) costs of the monopoly. The Federal to (8) and Paragraph 79a, the spirits Monopoly Administration set the normal surcharge was, in certain circumstances, selling price at DM 1 833 per hectolitre of reduced or increased depending on such spirit in a notice of 10 September 1975 criteria as the type of distillery, the (Bundesanzeiger [Official Gazette] No 174 quantities produced and the type of raw of 19 September 1975). material used.

Federal Minister for Finance (III A2-V liqueurs, armagnac, pruneaux, sherry and 7030-32/76), the surcharge was levied at a port) from Great Britain, the Netherlands, rate of only DM 1 500 per hectolitre of France, Spain and Portugal respectively. spirit, that is to say, at a rate corresponding The Hauptzollamt Mainz, the defendant in to the tax on spirits, when the liability to tax the main proceedings, fixed the monopoly arose between 23 February and 17 March equalization duty payable on the products 1976. cleared through customs at DM 1 500 per hectolitre of spirit. Kupferberg considers

After Paragraph 152 (1), corresponded to the malting an unsuccessful objection to the difference between the monopoly's 'normal defendant in the main proceedings, Kup selling price' for spirits and the 'basic price' ferberg brought an action before the for spirits. Finanzgericht Rheinland-Pfalz [Finance Court, Rhineland-Palatinate]. The latter On the basis of the monopoly's actual upheld the plaintiff's case and, by a selling price of DM 1 683 per hectolitre of judgment of 13 February 1978, declared the spirit, between 23 February 1976 and 17 notice fixing the duty null and void in so far March 1976 the equalization duty would as it fixed the monopoly equalization duty have been DM 1 430 per hectolitre of spirit, at a level higher than DM 1430 per given the basic price of DM 253 per hectolitre of spirit. hectolitre of spirit at that time. On appeal on a point of law by the Haupt- However, on the basis of the 'normal selling zollamt, the Bundesfinanzhof [Federal price' published in the Bundesanzeiger Finance Court], by a decision of pursuant to Paragraph 82 (1) of the Verwer 5 August 1980, quashed the judgment on tungsordnung (Marketing Rules) of DM the ground that the actual selling price of 1 833 per hectolitre of spirit, the DM 1 683 per hectolitre of spirit which had equalization duty would have amounted to been applied as from 23 February 1976 was DM 1 580 per hectolitre. not the 'normal selling price for spirits' within the meaning of Paragraph 152 of the Nevertheless, between 23 February and 17 Law.

1.2. The plaintiff in the main proceedings, equalization duty at DM 1 500 per Sektkellerei C. A. Kupferberg & Cie KG hectolitre of spirit it had not claimed a.A. (hereinafter referred to as 'Kupf payment of that part of the equalization erberg'), put into free circulation between 1 duty known as the monopoly equalization and 17 March 1976 various types of margin (Monopolausgleichspitze).

KUPFERBERG / HAUPTZOLLAMT MAINZ

The Bundesfinanzhof found, however, that DM 150 per hectolitre of spirit, namely the judgment of the Finanzgericht had from DM 1 833 to DM 1 683 per hectolitre failed to examine the question of the of spirit, whereas it retained the selling price possible incompatibility with, in particular, of DM 1 833 per hectolitre of spirit during Articles 37 and 95 of the EEC Treaty of the same period for the purpose of calcu fixing the monopoly equalization duty lating the monopoly equalization duty higher than DM 1 430.

The Bund and by the Commission of the European esfinanzhof, as the appeal court, could not Communities, represented by its Legal make those findings itself and so remitted Advisers, Friedrich-Wilhelm Albrecht and the case to the Finanzgericht Rheinland- Peter Gilsdorf. Pfalz for a fresh decision. 1.6. Upon hearing the report of the Judge- 1.3. By order of 6 October 1983 the Rapporteur and the views of the Advocate Finanzgericht decided, pursuant to Article General, the Court decided to open the oral 177 of the EEC Treaty, that since the procedure without any preparatory inquiry. resolution of the dispute hinged on the However, the Court submitted a question to interpretation of the provisions of the German Government, which the latter Community law set out in the question answered in writing. referred to the Court it should stay the proceedings until the Court gave a prel- 1.7. By order of 4 July 1984 the Court iminaty ruling on the following question : assigned the case to the Fourth Chamber pursuant to Article 95 (1) and (2) of the 'Should Articles 37 and 95 of the EEC Rules of Procedure. Treaty, together with.

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Spirits. But in no case could it imply that the 1976 amending Paragraphs 79, 84, 151 and provisions prohibiting discrimination 152 of the Law on the Monopoly in Spirits, contained in the EEC Treaty or in the the taxes levied on spirits under the Agreements concluded with Spain and applicable legal rules were as follows: Portugal had been infringed. Moreover, according to the Court's judgment of 2.1. Taxation of imported spirits under the 7 May 1981 (Case 153/80, Rumhaus first sentence of Paragraph 152 (1) of the Hansen GmbH v Hauptzollamt Flensburg, Law on the Monopoly in Spirits [1981] ECR 1165), while the above- normal selling price mentioned provisions establish the principle for DM 1 683.00 of equal treatment, they do not oblige the per hectolitre of spirit Member States to accord more favourable basic price for spirits DM 253.00 treatment to imported products than to their

In the Hauptzollamt's view, discrimination in taxation is out of the basic price for spirits DM 253.00 question, since all the spirits were subject, as per hectolitre of spirit indicated above, to one and the same rate of average expenses saved DM 23.00 taxation. As for economic discrimination, per hectolitre of spirit the Hauptzollamt points out that, in its judgment of 13 March 1979 (Case 91/78, spirits surcharge DM 1 407.00 Hansen GmbH v Hauptzollamt Flensburg, per hectolitre of spirit [1979] ECR 935), the Court clearly laid 2.3. Taxation of spirits which may be sold down the principles applicable in the field: to the Monopoly Administration under such discrimination would only have taken Paragraph 84 (1) and Paragraph 76 of the place had the monopoly's prices been Law read together with the circular of 24 abnormally low compared with those in March 1976 of the Federal Minister for

KUPFERBERG / HAUPTZOLLAMT MAINZ

April 1982 (Case 17/81, Pabst & Riehan v purchased the spirits and the lowest selling Hauptzollamt Oldenburg, [1982] ECR 1331) price for products of the Deutsche the Court defined the scope of each of Kornbranntwein-Verwertungsstelle, plus a those provisions when it decided that Article flat-rate sum to cover the costs incurred by the distiller in purifying the spirits. 37 concerns only activities intrinsically connected with the specific business of the spirits surcharge DM 1 500.00 monopoly in question.

2.4. Taxation of spirits which must be sold calculation of the tax, in so far as it to the Federal Monopoly Administration determined the amount of the import duties under paragraph 84 (1) of the Law on the for the period in question, Article 95 of the Monopoly in Spirits read together with Treaty applies concurrently. Paragraphs 62, 63 et seq. of that Law. Turning to the products from non-member normal selling price for its DM 1 623.00 countries, sherry from Spain and port from per hectolitre of spirit Portugal, which come under Article 3 of the less the acquisition price Agreement between the EEC and Spain and (varies according to the Article 21 of the Agreement between the amount by which it may EEC and the Portuguese Republic be increased or reduced), respectively, Kupferberg refers to the average about DM 370.00 Court's judgment of 26 October 1982 (Case 104/81, Hauptzollamt Mainz v Kup- per hectolitre of spirit ferberg & Cie, [1982] ECR 3641), and net tax DM 1 253.00 points out that the said provisions are per hectolitre of spirit directly applicable and capable of conferring Before addressing the 'broad' issue of on individual traders rights which the courts discrimination against spirits imported in the must protect.

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fruit. It adds that the differentiation made in domestically-produced spirits. It contends the Law on the Monopoly in Spirits that Article 37 (1) and (2), read together, between spirits exempted from the require the Member States to refrain from requirement to be sold to the Federal taking any new measure restricting the Monopoly Administration (Paragraph 78), scope of the articles dealing with the spirits subject to that requirement abolition of customs duties and quantitative (Paragraph 84) and spirits which may be so restrictions. In its opinion, in view of the sold (Paragraph 76 (2)) (including spirits situation of Article 37 in the scheme of the made from cereals, potatoes, maize, marcs, Treaty and the reference made in Article 37 lees and musts of apples or pears) should be (3) to Articles 30 and 34, the prohibition left out of account for the purpose of extends to measures having an effect establishing similarity, since it is based solely equivalent to quantitative restrictions.

requires. Referring to the Court's judgment recourse to the issue of the taxation levied of 29 April 1982 (Case 17/81, on similar domestic products — even Pabst & Richarz v Hauptzollamt Oldenburg, though for the purposes of those articles the [1982] ECR 1331), it contends, first, that term 'discrimination' fundamentally signifies the legal classification in Community law of imported products being treated less a national measure (namely the calculation favourably than domestic ones — since the of monopoly equalization duty) does not provision concerning imported products depend upon how that measure is viewed or (namely Paragraph 152) was interpreted and

applied in a manner which was in 21 respectively of the agreements concluded contradiction with its wording. In its with Spain and Portugal. opinion, this raises a presumption that imported spirits were treated less favourably As for the third sub-question, namely than the legislature expressly stipulated. whether imported spirits suffer discrimi nation compared with domestic spirits which may be sold to the Federal Monopoly The above also applies to Articles 3 and 21 Administration when the calculation of the respectively of the free-trade agreements. tax on imported spirits does not take account of the actual reduction of DM 150 in the normal selling price for spirits, Lastly, according to calculations provided whereas domestic spirits eligible for sale to by Kupferberg on a preliminary basis, the Federal Monopoly Administration and, domestically-produced spirits are at all in particular, grain spirits produced by events subjected to lower taxation. distillers who market their products themselves qualify for a subsidy in the form of an aid of DM 150, on top of which they As regards the second sub-question, namely receive supplementary aid intended to cover whether imported spirits suffer discrimi purification expenses (about DM 30) to nation compared with similar spirits which offset the reduction in the selling price, are not subject to the requirement to be sold Kupferberg points out that the said aid, to the Federal Monopoly Administration which was introduced by a circular of 24 when the amount of monopoly equalization March 1976 of the Minister for Finance, has duty (Paragraph 152) and the amount of the to its knowledge not been notified to the spirits surcharge (Paragraph 79) are based Commission pursuant to Article 93 of the on the normal selling price for spirits and Treaty and has the effect, from a purely the Administration does not calculate the economic point of view, of decreasing the tax on the basis of the actual selling price amount of tax on domestic grain spirit to but on that of the normal selling price pre DM 1 320 per hectolitre of spirit or even viously published and retained by way of less. In its view, payment of the said aid fiction, Kupferberg points out that the term infringes Article 95 of the EEC Treaty, as 'impose' in Article 95 (1) of the EEC Treaty the Court found in its judgments of 21 May does not signify merely the actual taxation 1980 (Case 73/79, Commission of the

On undermined by the Court's judgment of 13 the basis of the provisions on the amount of March 1979 in Case 91/78 (Hansen GmbH equalization duty (Paragraph 152) and the v Hauptzollamt Flensburg, [1979] ECR 935), amount of spirits surcharge (Paragraph 79) in which the Court considered that there and in view of the actual selling price of was a causal link between the amount of aid DM 1 683, the amount of equalization duty granted to producers in the form of a should have been DM 1 430 per hectolitre guaranteed acquisition price and the selling of spirit as against a spirits surcharge of DM price, owing to the intervention of the

JUDGMENT OF THE COURT — CASE 253/83

monopoly. Flensburg, [1979] ECR 935) is not applicable in this case. It contends in this Finally, as regards the fourth sub-question, connection that during the period at issue namely whether imported spirits suffer the final selling price of the monopoly was discrimination compared with domestic not determined autonomously on the basis spirits which are subject to the requirement of considerations of commercial policy, to be sold to the Federal Monopoly since the Federal Monopoly Administration Administration, when the calculation of the had no means available to it for this tax on imported products (Paragraph 152) purpose. does not take account of the de facto DM 150 reduction in the normal selling price whereas domestic spirits sold to the Federal In conclusion, Kupferberg considers that Monopoly Administration and the Deutsche these factors show that, leaving aside Kornbranntwein-Verwertungsstelle are questions concerning the similarity or comparability of the products, levying an purchased at a price markedly higher equalization duty on spirits of more than (between DM 250 and DM 550) than their DM 1 430 per hectolitre of spirit infringes subsequent selling price (DM 1 683), Kup Articles 37 and 95 of the EEC Treaty and ferberg points out that, in view of the Articles 3 and 21 respectively of the free- reduction in the normal selling price from

The upshot is higher indirect taxation on Even when the tax on imported products is imported spirits. comparable with the taxes levied on similar domestic products, Community law requires In Kupferberg's view, even if it were to be the tax provisions applicable to domestic considered that the diminution in the selling products to be interpreted and applied

In the Commission's view, although the question submitted by the Finanzgericht for Consideration in the light of Articles 37 and a preliminary ruling is formulated with a 95 of the EEC Treaty view to obtaining a concrete decision concerning the amount of the duty to be levied on products put into free circulation 1 — Article 95 of the Treaty by Kupferberg, it is admissible, since it enables the Court to give an answer solely on the interpretation of Community law. (a) The Commission emphasizes that during the period in question imported products were subject to an equalization The Commission first points out that the duty of DM 1 500 per hectolitre of spirit, object of the proceedings pending before which was equivalent to the tax levied on the Finanzgericht is to establish whether similar or competing domestic products Kupferberg may, according to Community whether they were spirits sold by the law, require that spirits originating in monopoly and subject to the tax on spirits another Member State or in a non-member or spirits not sold to the monopoly and country be subjected to an equalization duty subject to the spirits surcharge. of DM 1 430 instead of DM 1 500 per hectolitre of spirit. It then states that, in its view, it is appropriate to answer the Given that, subject to the observations set question first of all from the point of view out below, the tax on spirits was identical in of products originating in other Member all three cases, namely DM 1 500 per States (subheading 22.09 C of the Common hectolitre of spirit, the tax levied on the Customs Tariff) in the light of Articles 95 products from other Member States did not and 37 of the EEC Treaty and subsequently exceed, directly or indirectly, the tax on from that of products from Spain and similar domestic products. The conditions Portugal (subheading 22.05 C III of the laid down in Article 95 were therefore met Common Customs Tariff) in the light of and so, in the Commission's view, Kup­ Article 3 and Article 21 respectively of the ferberg is not entitled to have the rate Agreements between the EEC and Spain reduced to DM 1 430 per hectolitre of and Portugal. spirit.

(d) However, the Commission considers Referring to the judgments of the Court of that should it turn out, contrary to its belief, 13 March 1979 (Case 86/78, Peureux v that the spirits sold by the monopoly were Directeur des Services Fiscaux, [1979] ECR in fact less heavily taxed owing to the 897) and 7 May 1981 (Case 152/80, monopoly's being partly released from Rumhaus Hansen GmbH v Hauptzollamt levying and paying the tax, the issue would Flensburg, [1981] ECR 1165), it points out take on a different complexion. In that that although Article 95 of the Treaty does regard, it points out that from an economic not preclude goods imported from another point of view exemption from tax to the Member State from enjoying more extent of DM 70, as would be the case, favourable tax treatment than domestic would constitute no more than a partial goods it does not require this, since it offsetting in advance of losses incurred by simply prohibits imported products from the monopoly. That would be aid, and, as being taxed more heavily than domestic such, would have to be assessed in the light, products. not of Article 95 of the Treaty, but of Article 37. It adds that it would be wholly specious to seek to make a distinction Finally, the Commission stresses that, as depending on whether the tax to be paid is regards the rate of tax actually applied in reduced immediately or whether it is first this case, the rate of DM 1 500 per paid in full to the Treasury and later partly hectolitre of spirit was fixed by the Minister offset from general tax revenue, in so far as for Finance in his circular of losses are always offset from tax revenue. 23 March 1976 without reference in any way to the calculation method set out in Paragraph 152 of the Law on the Monopoly in Spirits. The Commission considers that even if that view were not accepted, the existence of an infringement of Article 95 would still have (c) As for Kupferberg's doubts about the to be established in the actual case of amount of tax actually levied on domestic the spirits put into free circulation by Kup­ spirits by the monopoly, the Commission ferberg. In this connection it would, in points out that the fact that a calculation its view, be necessary to take the following carried out on the basis of the reduced factors into account:

— Whisky, geneva, armagnac and discrimination for the tax concessions pruneaux are distilled spirits which are provided for in the Law on the Monopoly not comparable with the spirit sold by in Spirits and, in particular, in Paragraphs the Federal Monopoly Administration. 79 and 79a thereof, provided that they The only similar products on the satisfy the requisite conditions. It refers in German market, within the meaning of this connection to the Court's case-law, the first paragraph of Article 95, are which provides the necessary guidance to those products which are not subject to enable the Finanzgericht to decide on the the requirement to be sold to the matter once it has made the necessary monopoly, such as the various grain findings of fact. spirits (Steinhäger, for instance) and spirits derived from fruit.

infringed. Article 37, the Commission nevertheless considers that it should tackle that question — At the most only the liqueur imported in view of the fact that it is linked to some from the Netherlands might warrant a extent with the taxation aspects of the case different line of argument in so far as and was raised by Kupferberg. spirit is used in its manufacture, as is the case in Germany. If spirit from the — It points out that the said reduction does monopoly is used to manufacture not constitute a measure peculiar to the liqueur, the German liqueur would enjoy State monopoly but a commercial measure preferential tax treatment to the extent dictated by competition. of DM 70 per hectolitre of spirit, contrary to the first paragraph of Article — Since the question nevertheless arises as

JUDGMENT OF THE COURT — CASE 253/83

price. Even if it were correct that would not alter the legal assessment of the case at all. On the economic level, the tax reduction 'Any practice by a State monopoly which could amount to nothing more than the consists in marketing a product such as offsetting of losses in advance, that is to spirits with the aid of public funds, at an say, to a sales practice of the monopoly to abnormally low resale price compared to which the Court's observations cited above the price, before tax, of spirits of

consonant with the requirements of the market, as determined by the prices offered for alcohol originating in other Member — Finally, the Commission notes that no States. The Commission finds therefore that more is it possible to argue that the tax on it cannot be said that the monopoly imported spirit helps to finance the losses charged 'abnormally low' prices. It incurred by the monopoly as a result of its followed that an importer may not avail guaranteed purchase prices and hence is itself of Article 37 and the change in the contrary to Article 95, in so far as no monopoly's selling price to claim a causal relationship and no link as regards reduction of DM 70 per hectolitre of spirit the destination of the tax can be found in the import duty. between the tax which was levied and the funding of the purchase price that was

KUPFERBERG / HAUFTZOLLAMT MAINZ

The Commission concludes from the Treaty has taken place there can a fortiori foregoing observations that the application have been no infringement of Article 3 or during the material period of a tax on Article 21 of the Agreements. The imported spirits equivalent in amount (DM Commission refers to its observations 1 500 per hectolitre of spirit) to the tax on concerning Article 95, which apply mutatis spirits is contrary neither to Article 95 nor mutandis to the provisions of the to Article 37 of the EEC Treaty. Agreements.

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3 — Apart from that, any similarity with as the Agreements have a much any domestic spirit-based product, narrower scope than the EEC Treaty. vermouth for example, should be Sherry and port, although they are rejected — even if the product is not similar to spirit-based products deemed to be a liqueur wine made in Germany without the according to the definition of liqueur addition of vinous spirit, are at the wine under German law — if that most 'partially in competition' with product is derived from spirit of non- those products. But that does not vinous origin, since such a product imply that the Agreements have been cannot be deemed to be a similar infringed, since neither of them product in view of the specific quality contain a provision comparable to the requirements that port and sherry second paragraph of Article 95. have to satisfy. The condition of 'similarity' for the purposes of the 3. Oral procedure Agreements should be interpreted ' At the sitting on 23 October 1984 Kup­ strictly and not 'flexibly , as in the ferberg, represented by Dr Ehle, and the case of the interpretation given to that Commission of the European Communities, concept in the context of the first represented by F. W. Albrecht, presented paragraph of Article 95 of the Treaty oral argument. owing to the need to achieve 'total equality with regard to competition' in The Advocate General delivered his opinion the intra-Community sphere, in so far at the sitting on 27 November 1984.

Decision

1 By order of 6 October 1983, received at the Court Registry on 11 November 1983, the Finanzgericht Rheinland-Pfalz [Finance Court, Rhineland-Palatinate] referred to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Articles 37 and 95 of the EEC Treaty, Article 3 of the Agreement of 29 June 1970 between the EEC and Spain (Official Journal L 182, p. 1) and the first paragraph of Article 21 of the Agreement of 22 July 1972 between the EEC and the Portuguese Republic (Official Journal L 301, p. 164).

(b) spirits exempted from the requirement to be sold to the Federal Monopoly Administration (some grain and fruit spirits) or spirits which, in breach of that requirement, were not so sold; according to Paragraph 78 of the Law such spirits were liable to a spirits surcharge (Branntweinaufschlag). That surcharge corresponded to the difference between the normal selling price for spirits sold by the Federal Monopoly Administration and the basic price for spirits, less a flat-rate deduction of the average costs which the Federal Monopoly Administration saved by not taking delivery of the spirits. By virtue of Paragraph 79 (2) to (8) and Paragraph 79a, the spirits surcharge was, in certain circumstances, reduced or increased on the basis inter alia of criteria relating to the type of distillery, the quantities produced and the type of raw material used. In principle, the spirits surcharge always exceeded the amount of the tax on spirits, the difference between the two amounts being known as the marginal element of the spirits surcharge (Aufschlagspitze) ;

(c) imported spirits, which under Paragraph 151 (1) of the Law were liable to monopoly equalization duty (Monopolausgleich). Monopoly equalization duty was calculated in the same way as the spirits surcharge except that no flat-rate deduction was made to take account of expenditure saved by the Federal Monopoly Administration since, under Paragraph 152 (1) of the Law, which determined the amount of the said duty, 'monopoly equalization duty constitutes the difference between the normal selling price and the basic price for spirits'. The excess of monopoly equalization duty over the tax on spirits was known as the monopoly equalization margin (Monopolausgleichspitze).

5 By a judgment of 13 February 1978 the Finanzgericht allowed Kupferberg's application. On appeal on a point of law by the Hauptzollamt, the Bundes­ finanzhof [Federal Finance Court], by a decision of 5 August 1980, quashed that judgment on the ground that the actual selling price of DM 1683 per hectolitre of spirit which had been applied as from 23 February 1976 was not the 'normal selling price for spirits' within the meaning of Paragraph 152 of the Law. The normal selling price had remained the price that had been properly fixed and published in Bundesanzeiger No 174 of 19 September 1975, namely DM 1 833 per hectolitre of spirit. If the calculation method stipulated in the first sentence of Paragraph 152 (1) of the Law was used the monopoly equalization duty on imported spirits came to DM 1 580 per hectolitre of spirit. The Bundesfinanzhof stressed that the Hauptzollamt in its decision fixing the duty had applied the German rules to a limited degree only, since by fixing the amount of equalization duty at DM 1 500 per hectolitre of spirit it had not claimed payment of that part of the equalization duty known as the monopoly equalization margin (Monopolausgleichspitze). The Bundesfinanzhof concluded therefore that, in view of the aim of the proceedings, the levying of equalization duty of DM 1 500 per hectolitre of spirit, as set out by the contested decisions, was at all events proper from the point of view of German law.

6 The Bundesfinanzhof found, however, that the judgment of the Finanzgericht had failed to examine the question of the possible incompatibility with Articles 37 and 95 of the EEC Treaty of fixing the monopoly equalization duty higher than DM 1 430. In its view, the decision fixing the duty was liable to infringe Article 95 of the EEC Treaty together with Article 3 of the Agreement between the EEC and Spain and the first paragraph of Article 21 of the Agreement between the EEC and the Portuguese Republic only in so far as the Finanzgericht on re-examining the facts should hold that domestic spirits, exempted from the requirement to be sold to the Federal Monopoly Administration and comparable with the imported products, had been accorded the advantages conferred by Paragraphs 79 (2) and 79a of the Law on the Monopoly in Spirits.

'Should Articles 37 and 95 of the EEC Treaty, together with Article 3 of the Agreement of 29 June 1970 between the European Economic Community and Spain and the first paragraph of Article 21 of the Agreement of 22 July 1972 between the European Economic Community and the Portuguese Republic, be interpreted to mean that an importer of spirits from other Member States and from Spain and Portugal may invoke the aforesaid provisions before a national court, on the ground that the Federal Monopoly Administration for Spirits (Bundes­ monopolverwaltung für Branntwein) lowered its selling price for spirits between 23 February and 17 March 1976 by DM 150 per hectolitre of spirit, namely from DM 1 833 to DM 1 683 per hectolitre of spirit, whereas it retained the selling price of DM 1 833 per hectolitre of spirit during the same period for the purposes of calcu­ lating the monopoly equalization duty (Monopolausgleich) on imported spirits?'

9 That question falls into two parts : the first concerns the compatibility with Articles 37 and 95 of the EEC Treaty of the defacto reduction in the selling price of spirits sold by the Federal Monopoly Administration together with the concurrent retention of the former selling price for such spirits for the purpose of calculating the monopoly equalization duty payable on imported products; the second concerns the compatibility of the practice described above with the provisions corresponding to Article 95 of the EEC Treaty which are contained in the Agreements concluded with Spain and Portugal.

The first part of the question

12 It should be observed in that regard that, as the Court has already stated in its judgment of 7 May 1981 (Case 153/80, Rumhaus Hansen v Hauptzollamt Flensburg, [1981] ECR 1165), although Article 95 requires imported products actually to be treated in the same way as comparable domestic products Community law does not require Member States to treat imported products more favourably than domestic products.

1 3 Lastly, it should be emphasized that it is not for the Court of Justice but for the national court to establish the facts underlying the dispute and to verify whether the imported spirits and the corresponding domestic spirits were in fact generally subject, during the period in question, to the same rates of taxation pursuant inter alia to the circular of 23 March 1976 of the Federal Minister for Finance or whether in fact they were taxed at different rates. Moreover, in reply to a question put by the Court, the Government of the Federal Republic of Germany stated that throughout the period in question the Federal Monopoly Administration paid tax at the same rate as that imposed on spirits imported from the other Member States.

Article 37 of the Treaty

1 4 The purpose of the question relating to Article 37 of the EEC Treaty is to enable the national court to determine whether the reduction in the selling price actually charged by the Federal Monopoly Administration from DM 1 833 to DM 1 683 per hectolitre of spirit is compatible with Article 37.

KUPFERBERG / HAUPTZOLLAMT MAINZ

15 As the Court has already observed in the judgment of 13 March 1979 (Case 91/78, Hansen GmbH v Hauptzollamt Flensburg [1979] ECR 935), where such a measure is dictated by reasons connected with the monopoly's marketing practices, it is not automatically open to criticism unless the application of that measure is injurious to the equality of opportunity which must be accorded to imported products in so far as domestic spirits are marketed with the aid of public funds at an abnormally low resale price compared with the price, before tax, of spirits of comparable quality imported from another Member State.

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consequence from the point of view of that provision, provided that the rate of taxation that was actually applied to imported spirits during that period did not exceed the taxation actually applied to similar domestic products.

19 The concept of similarity contained in the first paragraph of Article 21 of the Agreement, as interpreted by the Court, implies that the products concerned are similar both as regards their method of manufacture and as regards their charac­ teristics. Accordingly, it is for the national court to judge whether during the period at issue imported spirits were in fact taxed at a rate identical to the rate at which similar products of Community origin were taxed.

Article 3 of the Agreement between the EEC and Spain

20 The considerations set out above also apply to Article 3 of the Agreement between the EEC and Spain since the wording of that article is identical to that of the first paragraph of Article 21 of the Agreement with the Portuguese Republic and the subject-matter and the scope of the two agreements are comparable.

21 The answer to both parts of the question referred to the Court for a preliminary ruling should therefore be that Articles 95 and 37 of the EEC Treaty, Article 21 of the Agreement between the EEC and the Portuguese Republic and Article 3 of the Agreement between the EEC and Spain must be interpreted as not precluding the defactoreduction made in the selling price of spirit sold by the Federal Monopoly Administration in a given period provided that the rate of taxation actually applied to imported products during that period did not exceed the rate of taxation actually levied on corresponding domestic products.

in answer to the question referred to it by the Finanzgericht Rheinland-Pfalz by order of 6 October 1983, hereby rules:

Articles 95 and 37 of the EEC Treaty, Article 21 of the Agreement between the EEC and the Portuguese Republic and Article 3 of the Agreement between the EEC and Spain must be interpreted as not precluding the de facto reduction made in the selling price of spirits sold by the Federal Monopoly Administration during a given period provided that the rate of taxation actually applied to imported products in that period did not exceed the rate of taxation actually levied on corresponding domestic products.

Bosco Pescatore

O'Keeffe Koopmans Bahlmann

Delivered in open court in Luxembourg on 15 January 1985.

P. Heim G. Bosco Registrar President of the Fourth Chamber