C-283/83

HAUPTZOLLAMT MAINZ,

on the validity of Council Regulation (EEC) N o 1167/76 of 17 May 1976 amending Annex IV to Regulation (EEC) No 816/70 laying down additional provisions for the common organization of the market in wine and the Common Customs Tariff as regards the exchange rates applicable to customs duties on certain wines (Official Journal 1976, L 135, p. 42), and on the validity of Article 2 of Council Regulation (EEC) No 2842/76 of 23 November 1976 amending Annex IV to Regulation (EEC) N o 816/70 (Official Journal 1976, L 327, p. 2),

T H E C O U R T (First Chamber)

composed of: G. Bosco, President of Chamber, T. Koopmans and R. Joliét, Judges,

Advocate General : P. VerLoren van Themaat Registrar: P. Heim

gives the following

The facts of the case, the course of lation N o 2842/76 on 23 November the procedure and the observations 1976. The customs duty calculated on submitted under Article 20 of the Statute the basis of General Rule C 3 came to of the Court of Justice of the EEC may DM 43.92 per hectolitre, whereas if the be summarized as follows: conversion had been carried out for the quantities imported by Racke on the basis of the representative rate duty I —• F a c t s a n d w r i t t e n p r o c e d u r e would have been levied at DM 42.94 per hectolitre. In August and October 1976 Racke declared that a total of 217 507 litres of Tokay liqueur wine imported from non- Racke brought an action before the member countries and falling under Finanzgericht Rheinland-Pfalz [Finance subheading 22.05 C III (b) 2 of the Court, Rheinland-Palatinatc] challenging Common Customs Tariff had been the application of General Rule C 3 of withdrawn from its bonded warehouse the Common Customs Tariff for the and brought into free circulation in July purposes of converting the customs and September 1976. duties in question into national currency. It contended that: The responsible customs office, Haupt- zollamt [Principal Customs Office] (a) Insufficient reasons were stated in Mainz, converted the autonomous Regulation No 1167/76; customs duty due on that wine, namely 12 units of account per hectolitre, into (b) Regulation No 1167/76 was in­ German marks in accordance with the compatible with the second and third version of General Rule C 3 of the subparagraphs of Article 40 (3) of Common Customs Tariff in force at the the EEC Treaty; and time, which stipulated that conversion into national currency should be effected (c) Since Regulation No 1167/76 was by means of the par values com­ unlawful, Article 2 of Regulation municated to and recognized by the No 2842/76 was also unlawful in so International Monetary Fund. far as it did not make the latter regulation retroactive to the date However, Regulation N o 1167/76, on which Regulation No 1167/76 which came into force on 24 May 1976, entered into force. provided that the duty on certain other wines falling within the same tariff heading as Tokay should be converted in accordance with the representative rate, The Finanzgericht dismissed the con­ that is to say the rate applied for the tention that insufficient reasons were purposes of the common agricultural stated. However, with regard to the policy. second contention, it queried whether the margin of discretion normally That rule was not extended to Tokay enjoyed by the Community institutions wine until the adoption of Council Regu­ in implementing the common agricultural

policy would have been substantially In accordance with Article 20 of the reduced if it had been obvious from Protocol on the Statute of the Court of the outset that the application of two Justice of the EEC, written observations different exchange rates was bound to were submitted by Racke, represented result in distortions of competition as by Mr Nehm, Rechtsanwalt, of Ehle, between imported wines. Feldmann & Schiller, Cologne, by the Council of the European Communities, Consequently, by an order dated 24 represented by Arthur Bräutigam, a November 1983, the Finanzgericht member of the Legal Department, acting referred the following questions to the as Agent, and by the Commission of the Court for a preliminary ruling : European Communities, represented by Jörn Sack, a member of the Legal Department, acting as Agent. " 1 . Does Council Regulation (EEC) No 1167/76 of 17 May 1976 (Official Journal 1976, L 135, p. 42) infringe Upon hearing the report of the Judge- the second and third subparagraphs Rapporteur and the views of the of Article 40 (3) of the EEC Treaty, Advocate General, the Court decided to in so far as it excludes Tokay wines open the oral procedure without any falling under subheading 22.05 C III preparatory inquiry. It further decided, (b) 2 of the Common Customs under Article 95 (1) of the Rules of Tariff from the application of the Procedure, to assign the case to the First representative exchange rate used Chamber. for the conversion into national currencies (here, German marks) of the rate of customs duty expressed in units of account, and retains the II — T h e a p p l i c a b l e l e g i s l a t i o n arrangement under General Rule C 3 in Part I, Section I, of Regu- lation No 950/68 of the Council of Regulation (EEC) No 816/70 of the 28 June 1968 (Official Journal, Council of 28 April 1970 laying down English Special Edition 1968 (I), additional provisions for the common p. 275)? organization of the market in wine (Official Journal, English Special Edition 2. If so, what are the legal con- 1970 (I), p. 234) makes provision for a sequences thereof for the applica- countervailing charge to be levied if the bility of Article 2 of Regulation duties laid down in the Common (EEC) No 2842/76 of 23 November Customs Tariff are insufficient to afford 1976 (Official Journal 1976, L 327, Community wines protection vis-à-vis p. 2)? wines imported from outside the Community. Under the third subpara- In particular, may the individual graph of Article 9 (3) of that regulation a within the Community require that decision may be taken not to levy all regulation to be applied retro- or part of the countervailing charge spectively, with effect from the entry on imports of certain quality wines into force of Regulation (EEC) No produced in non-member countries. 1167/76?" Regulation (EEC) No 1019/70 of the Commission of 29 May 1970 on detailed rules for establishing free-at-frontier The request for a preliminary ruling was offer prices and fixing the countervailing lodged with the Court Registry on 20 charge in the wine sector (Official December 1983. Journal, English Special Edition 1970 (I),

Racke contends that Regulation No 1167/76 infringes the prohibition of discrimination laid down in Article 40 (3) of the EEC Treaty on the ground that it In order to overcome the difficulties deals with like situations differently; such described above, the Council adopted difference in treatment has no objective Regulation No 1167/76 of 17 May 1976 justification and distorts competition amending Annex IV to Regulation No appreciably. 816/70 (Official Journal 1976, L 135, p. 42). That regulation stated in the preamble that the same rules should be applied to the reference prices and customs duties when they are converted Tokay is, in fact, in direct competition into national currencies. The annex to with other types of liqueur wine falling the regulation stipulated that the rep­ under subheading 22.05 C of the resentative rate should be applied for the Common Customs Tariff, to which the

JUDGMENT OF 13. 11. 1984 — CASE 283/83

There can be no reasonable doubt that In the Council's view, it is doubtful the differences in the exchange rates whether it can be held that a comparable applicable during the period in which situation exists in this case. The products Regulation No 1167/76 was in force listed under subheading 22.05 C can be distorted competition in a discriminatory broken down into ordinary wines (sub- manner to the detriment of Tokay. That heading C I and C I I ) with an actual view is borne out by the adoption of alcoholic strength of no more than 13° Regulation No 2842/76 less than six and 15° respectively, liqueur wines (C III months after the entry into force of and C I V ) with an actual alcoholic Regulation No 1167/76. In the fourth strength of 15° to 22°, which are further recital in the preamble to Regulation No subdivided into quality liqueur wines 2842/76 the Council itself observed that (Port, Madeira, sherry, Tokay and "application of two different exchange Setúbal muscatel) and other liqueur rates in respect of wines falling within wines, and lastly wines of an actual subheading 22.05 C of the Common alcoholic strength exceeding 22° ( C V ) . Customs Tariff may lead to distortion in It is hard to imagine that the average competition between imported wines" consumer looks on ordinary wines or and that "this situation should be wines of over 22° as products with the remedied as a matter of urgency". same characteristics and properties as Consequently, the first question should quality liqueur wines such as Port, sherry be answered in the affirmative. and Tokay.

Consequently, the argument must focus wines imported from non-member on liqueur wines, since they are products countries granted tariff concessions. That which consumers may look on as inter was not the case as far as high-priced changeable. Yet even there, it is a products, such as quality liqueur wines, question of imported liqueur wines were concerned, wines which are not which differ very much from one subject to the possible levying of the another in terms of quality and price and countervailing charge. should therefore normally find different markets, so that they cannot, as a general rule, be in direct competition with one another to a substantial extent. The Commission observes that the first On that basis, the Council contends that question consists of two parts which the products in question are not in must be considered separately: firstly, comparable situations and hence there is does Regulation No 1167/76 infringe the no discrimination within the meaning of principle of non-discrimination (second Community law. subparagraph of Article 40 (3)), and, secondly, is Regulation No 1167/76 compatible with a common price policy based on uniform methods of calculation In any event, the Council considers that (third subparagraph of Article 40 (3)). the protective arrangements arising from the Common Customs Tariff and the basic regulation on the wine sector are not identical as regards imported quality As far as the first limb of the question is liqueur wines, on the one hand, and concerned, the Commission's obser other imported wines falling within sub vations do not differ substantially from heading 22.05 C, on the other. Unlike all the Council's. The Commission adds, the other products falling within that among other things, that it is not subheading of the Common Customs possible to speak of discrimination when, Tariff, quality liqueur wines, such as as in this case, the difference between the Tokay, are not subject to the possible two conversion rates is barely perceptible levying of a countervailing charge. More and the practical effect of the alleged important still, the customs duty on discriminatory measure is minimal. quality liqueur wines is in every case Furthermore, the use of the "green rate" lower than that on other liqueur wines. was more advantageous to importers only in countries with strong currencies. Even if the application of two different exchange rates did give rise to difficulties The Council therefore contends that, and, perhaps, to distortions of com

JUDGMENT OF 13. 11. 1984 — CASE 283/83

Article 40 (3), the Commission of a regulation such as Regulation N o . emphasizes that, like the other provisions 2842/76, but on whether Regulation No of Article 40, that provision is concerned 2842/76 is void by virtue of the fact that only with the specific machinery of the it is not retroactive. Racke points out organizations of the agricultural markets. that, to attain its stated objective of Accordingly, customs duties may be remedying, as a matter of urgency, calculated and fixed on the basis of a distortions of competition caused by fundamentally different method from Regulation No 1167/76, Regulation N o that used for prices and taxes within the 2842/76 should have been made retro- context of the common agricultural active to the date when Regulation policy. Otherwise, the basic uniformity No 1167/76 entered into force. In this of the customs legislation would be case, considerations of legal certainty impaired. In addition, the Commission and legitimate expectations, which in considers that Article 40 does not principle preclude the retroactivity of a preclude the possibility of divergences Community regulation, would not of in respect of particular goods within course have impeded the retroactive a product group in so far as the application of the "green rate", since divergences are justified on objective that would have restored the importers grounds. The Commission cites the concerned to their original competitive different legal rules applicable to quality position. It follows that Regulation No liqueur wines and other wines, to which 2842/76 is also void for having infringed reference has already been made in the prohibition of discrimination, in- support of the argument that discrimi- asmuch as the Council failed from the nation prohibited by the second sub- outset to fulfil its obligation to eliminate paragraph of Article 40 (3) is not present the distortions of competition introduced in this case. by Regulation N o 1167/76.

qustion were subject to different rates of orities of the Community alone are customs duty, with a lower rate being empowered to rectify the resulting applied precisely to quality wines, situation, and mere retroactive appli­ including Tokay. Lastly, the Council cation of the green rate would not elim­ stresses that, since the risk of distortion inate the existing distortions. of competition could only become apparent when Regulation No 1167/76 was applied in practice and was completely unforeseeable at the time IV — Oral procedure when that regulation was adopted, it was unnecessary to make Regulation No At the sitting on 21 June 1984, Racke, 2842/76 retroactive. represented by Mr Nehm, the Council of the European Communities, represented by A. Bräutigam, and the Commission of The Commission also contends that there the European Communities, represented is no point in discussing the second by J. Sack, presented oral argument. question. None the less, it points out, purely in the alternative, that if the The Advocate General delivered his original version of Regulation No opinion at the sitting on 27 September 1167/76 is invalid the competent auth­ 1984.

Decision

1 By an order dated 24 November 1983, which was received at the Court Registry on 20 December 1983, the Finanzgericht Rheinland-Pfalz [Finance Court, Rhineland-Palatinate] referred two questions to the Court under Article 177 of the EEC Treaty for a preliminary ruling on the validity of Council Regulation N o 1167/76 of 17 May 1976 (Official Journal 1976, L 135, p. 42) and on the possibility of giving retroactive effect to Council Regulation N o 2842/76 of 23 November 1976 (Official Journal 1976, L 327, p. 2).

5 The first question is worded as follows :

"Does Council Regulation (EEC) No 1167/76 of 17 May 1976 (Official Journal 1976, L 135, p. 42) infringe the second and third subparagraphs of Article 40 (3) of the EEC Treaty, in so far as it excludes Tokay wines falling under subheading 22.05 C III (b) 2 of the Common Customs Tariff from the application of the representative exchange rate used for the conversion into national currencies (here, German marks) of the rate of customs duty expressed in units of account, and retains the arrangement under General Rule C 3 in Part I, Section I, of Regulation (EEC) N o 950/68 of the Council of 28 June 1968 (Official Journal, English Special Edition 1968 (I), p. 275)?"

6 The second subparagraph of Article 40 (3) of the EEC Treaty provides that the common organization of agricultural markets "shall be limited to pursuit of the objectives set out in Article 39 and shall exclude any discrimination between producers or consumers within the Community". The third subpara- graph of Article 40 (3) states that "Any common price policy shall be based on common criteria and uniform methods of calculation". Therefore, the question can be divided into two parts, one concerning the meaning of the second subparagraph of Article 40 (3), the other concerning the meaning of the third subparagraph of Article 40 (3).

z As far as the first limb of the question is concerned, it is necessary to ascertain whether Tokay is in a comparable situation to those wines in respect of which customs duties expressed in units of account were converted into national currency at the representative rate, since, as the Court has consistently held, discrimination consists solely in the application of different rules to comparable situations or in the application of the same rule to

9 By Regulation N o 2506/75 of 29 September 1975 (Official Journal 1975, L 256, p. 2) the Council stipulated that the expression "free-at-frontier reference price" means the Community reference price less customs duties actually levied. However, as far as wines subject to the countervailing charge were concerned, that definition gave rise to problems in connection with the calculation of the charge, since the Community reference price was converted into national currency, pursuant to Council Regulation No 475/75 of 28 February 1975 (Official Journal 1975, L 52, p. 28), on the basis of the representative exchange rate while the customs duty was converted on the basis of the par value. There was therefore an obvious risk of distortions being caused by calculations carried out using non-uniform criteria. T o avoid that risk, Regulation N o 1167/76 provided that the customs duty should also be converted on the basis of the representative rate.

io In contrast, no such problem arose for wines which were not subject to the countervailing charge, and hence no comparison between the two situations appears to be justified.

JUDGMENT OF 13. 11. 1984 — CASE 283/83

1 1 It is clear from the foregoing that the application of different rules to the two situations described above does not result in a breach of the principle of non-discrimination.

1 2 Consequently, the answer to the first limb of the question must be that consideration of the matters raised has disclosed no factor of such a kind as to suggest that Regulation N o 1167/76 is contrary to the second subpara- graph of Article 40 (3) of Treaty.

The costs incurred by the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

RAČKE v HAUPTZOLLAMT MAINZ

On those grounds,

T H E C O U R T (First Chamber),

in answer to the questions referred to it by the Finanzgericht Rheinland- Pfalz, by order of 24 November 1983, hereby rules:

Consideration of the matters raised has disclosed no factor of such a kind as to affect the validity of Regulation No 1167/76.