C-235/90

OPINION OF MR MISCHO — CASE C-235/90

O P I N I O N O F M R ADVOCATE GENERAL M I S C H O delivered on 11 June 1991 *

Mr President, teristics of the charge in question were Members of the Court, defined by Decrees No 82-732 of 23 August 1982 and N o 87/676 of 17 August 1987 on the parafiscal storage charge in the cereals sector, * Articles 1 to 4 of which provided as 1. Aliments Morván S. à r. 1. (hereinafter follows. referred to as 'Morvan'), the applicant in the main proceedings, manufactures feed- ingstuffs for cereals. As such, it had to pay a parafiscal storage charge levied for the benefit of the Office National Interprofes- 'Article 1 sionnel des Céréales (National Cereals Trades Board) (hereinafter referred to as ' O N I C ' ) on the cereals which it utilized. Morvan applied for the charge to be repaid for the period 1 July 1986 to 31 May 1988 on the ground that the charge was contrary The levying of a parafiscal charge intended to Community law. When its application to cover national expenditure for storage was dismissed by the tax authorities it and intervention on the market in cereals brought proceedings before the Tribunal de shall be authorized for the . . . marketing Grande Instance (Regional Court), Morlaix, year and the four subsequent marketing which has requested the Court to provide it, years. by way of preliminary ruling, with

— certified seed grain exchanged for cereals of ordinary quality, within the — 0.20% of the intervention price for limit of a ceiling fixed by decree. durum wheat.'

The charge shall be repaid in respect of 3. The applicant in the main proceedings cereals utilized in the manufacture of maintains that that charge constitutes either products eligible for the production refund a charge having equivalent effect to a provided for in Article 11 of Regulation No customs duty prohibited by Article 9 et seq. 2727/75 of the Council of the European of the Treaty, or internal taxation with Communities, as amended. discriminatory effect within the meaning of Article 95, that it is incompatible with the machinery of the common agricultural policy and that it constitutes an aid Where products derived from cereals are prohibited by Article 92 of the Treaty. I imported or exported, the charge shall be shall examine those different aspects in turn. levied or repaid, as the case may be, taking account of the corresponding quantities of cereals laid down by the regulations of the European Economic Community. The compatibility of the tax with Articles 9 and 95 of the Treaty

Article J 4. It appears from Article 9 of the Treaty establishing the EEC that the Community is to be based on a customs union which is to The chargeable event shall be the sale or cover all trade in goods and to involve the utilization of the cereals by approved prohibition between Member States of collectors or producers of grain or the customs duties on imports and exports and importation of the cereals. of all charges having equivalent effect.

5. That prohibition also applies in respect of within a general system of internal taxation products subject to a common organization applying systematically to domestic and of the market, so much so that such a imported products according to the same prohibition no longer appears in the regu- criteria are not to be considered charges lations on the common organization of the having equivalent effect (see in particular markets adopted after the end of the transi- the judgment in Case 77/76 Cucchi v Avez tional period (the so-called 'definitive' regu- [1977] ECR 987, paragraph 12 et seq.). lations). Article 18(2) of Regulation (EEC) N o 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (Official Journal 1975 L 281, p. 1), referred to by Morvan, which prohibits the levying of any customs duty or 8. According to Morvan, that is precisely charge having equivalent effect, save as not the case here because the chargeable otherwise provided in that regulation or event, and accordingly the machinery for where derogation therefrom is decided by the charge, are not the same. For domestic the Council, is to be found in Title II of products the chargeable event is the sale or that regulation, entitled 'Trade with third utilization of the cereals by approved countries'. collectors or producers of cereals, whilst for imported products it is purely and simply the fact of crossing of the frontier. Imported products are thus taxed at an earlier stage than domestic products. 6. Morvan maintains that the disputed charge has restrictive effects on both imports and exports. For the sake of clarity, I shall distinguish between those two aspects. 9. I am unable to share that view, however. In my opinion, the situation is quite different from the facts of the case concerning excise duties imposed on alcohol in Ireland (judgment in Case 55/79 A — Effects of the charge on imports of goods Commission v Ireland [1980] ECR 481), cited by Morván. Irish spirits producers had the advantage of payment periods for exercise duty which exceeded the date on which the products were put on the market 7. The Court has consistently held that the by four to six weeks, whilst importers were fact that a charge such as the one at issue in required to pay the duty at the time when this case applied without distinction to the products were released for consumption. domestic products and to products from other Member States raises the question whether the charge in question comes within the prohibition set out in Article 9 or the rule against discrimination in internal taxation laid down by Article 95. A single 10. It cannot be said that domestic charge cannot, under the system of the producers benefit from a comparable Treaty, belong simultaneously to both those advantage in the present case since the categories and in principle financial charges charge is payable at the time when the

product is either sold by approved collectors device would in fact only appear to be a or utilized by producers of cereals. As system of internal taxation and accordingly regards domestic and imported products could by reason of its protective character alike, the charge is imposed on the product be termed a charge having an effect equi- at the time when it is released for valent to customs duties, with the result that consumption. the prohibitions set out in Article 9 and Article 8 of the regulation on the common organization of the market in cereals would be applicable. According to the case-law of 11. The circumstances in question are the Court, 'such a definition would never- therefore different from those that formed theless imply a clearly established the subject-matter of the judgment in the connection between, on the one hand, the Denkavit Loire case, 2 where the charge in collection of a fiscal duty levied without question was levied, in the case of domestic distinction on the products in question, products, on the weight of unprepared whether domestic or imported, and, on the product whilst imported products were other hand, the advantage which enures taxed on the weight of finished product. only for the benefit of the domestic products by reason of the proceeds of that same duty'. It is necessary 'that the charges imposed on the domestic product are made 12. It is necessary, moreover, to reject good in full' (judgment in the Cucchi case, Morvan's argument that the collection of paragraphs 18 and 19). the charge at the frontier involves inspections the cost of which will necessarily have to be borne by the importer, because, first, there is nothing to prove that any importer has been compelled to pay such costs and, secondly, it has also not been established that the levying of the charge on 15. It appears from the decrees governing domestic cereals does not also require the parafiscal charge that it is 'intended to inspections. cover national expenditure for storage and intervention on the market in cereals' incurred by the Office National Interprofes- sionnel des Céréales. As O N I C acts as an 13. I thus conclude that the charge is levied intervention agency within the meaning of on domestic and imported products the regulation on the common organization according to the same criteria. of the markets in cereals, and as it follows from Article 7 of that regulation that 'the intervention agencies designated by Member States shall be obliged to buy in 14. In the second place, it follows from the c e r e a l s . . . which are offered to them and case-law of the Court that a charge limited have been harvested in the Community, it to particular products could, however, cannot be claimed that the proceeds of the constitute a charge having equivalent effect charge are used to secure advantages for if it had the sole purpose of financing activ- domestic products alone. Furthermore, the ities for the specific advantage of the taxed fact that those products may be delivered domestic products so as to make good the into intervention does not constitute an fiscal charge imposed on them. Such a fiscal 'advantage' within the meaning of that case-law. That right derives from 2 — Judgment in Case 132/78 Denkavit v France [1979] ECR Community legislation. 1923.

16. The question whether the financing, in 19. Should it prove that during the material whole or in part, of ONIC's intervention period the storage charge was levied on the and storage activities by producers and products derived from cereals referred to in importers of cereals is compatible with the Article 1 of Regulation N o 2727/75 in Community agricultural rules is a separate proportion to the quantity of maize, question, which will be examined later. common wheat or maize groats and meal used in their manufacture, and that the charge was repaid to French producers of those goods, then one would be faced with a charge having equivalent effect unlawfully imposed on imports of the goods in

21. If the parafiscal charge is not a charge that court must declare that the charge in having equivalent effect to a customs duty, question is a charge having equivalent effect it constitutes internal taxation coming to a customs duty contrary to the Treaty. within Article 95 of the Treaty. Therefore, in order to be compatible with the Treaty it must not have a discriminatory effect on imported products. It has not been claimed that the rate of the charge imposed on imported products is higher than that 18.

products. The third paragraph of that (see in particular the judgment cited above provision provides, inter alia, that 'Where in Commission v Ireland, paragraph 8). In products derived from cereals are imported that respect, however, the only argument or exported, the charge shall be levied or put forward regarding the discriminatory repaid, as the case may be, taking account nature of the charge is the one claiming that of the corresponding quantities of cereals it is levied on imported products at an laid down by the regulations of the earlier stage than on domestic products, an European Economic Community'. argument which I have already rejected.

23. According to Morvan, the storage 26. At the hearing, Morvan produced an charge is also a charge having equivalent order of the French Minister of Agriculture effect to a customs duty on exports. It refers of 14 March 1988 (Journal Officiel de la in that respect to the Court's judgment in République Française of 10 April 1988, p. Joined Cases 36/80 and 71/80 Irish 4750), which confirms that when processed Creamery Milk Suppliers Association v products, and even goods not coming within Ireland [1981] ECR 735, paragraph 23, Annex II of the Treaty of Rome, derived which reads as follows: from common wheat, durum wheat, barley and maize are exported, the charge is repaid. I find it very surprising that the charge should be repaid in respect of cereals incorporated in biscuits or pasta products 'It is appropriate to point o u t . . . that in so but not in respect of those incorporated in far as it may be established that application feedingstuffs. of an internal duty falls more heavily on sales for export than on domestic sales, that duty has an equivalent effect to a customs duty on exports.' 27. However, since there was no discussion between the parties to the proceedings regarding the tariff heading or headings under which animal feedingstuffs come, I am unable to reach any definitive view on 24. Morván accepts that cereals exported this matter on the basis of the annexes to unprocessed are exempt from the storage that ministerial order. charge, but maintains that in reality the equivalent effect to a customs duty on exports occurs not in connection with exports of cereals but in connection with exports of the products of the persons 28. In any event, that question is irrelevant subject to the charge, namely domestic users for purposes of the resolution of the main of cereals. That is precisely the situation proceedings, because even if the charge was regarding producers of feedingstuffs. not repaid on exports of feedingstuffs, the

Compatibility of the charge with the common organization of the markets 31. Morvan does not dispute, however, that, during the period in respect of which repayment of the charge is requested, Council Regulation (EEC) N o 1334/86 of 29. Morvan asserts that the charge is 6 May 1986, 5 which, in the context contrary to the principle according to which of budgetary constraints, restricts the all intervention expenditure is to be financed EAGGF's responsibility to 7 5 % of the costs by the Community. It refers to Article 2 of in question, was applicable. Council Regulation (EEC) N o 1883/78 of 2 August 1978 laying down general rules for the financing of interventions by the European Agricultural Guidance and Guarantee Fund, Guarantee Section, " which provides that: 32. It is thus clear that a balance remains to be paid by the Member States. That being so, it is not necessary to comment on the arguments of the French Government, 'where, within the framework of a common which claims that the charge is used to organization of the market, a sum per unit cover the difference between the actual is determined for an intervention measure, costs incurred by the national agency and the resulting expenditure shall be met the flat-rate amount paid by the Fund, a entirely by Community funds'. difference which arises because the Fund applies an average interest rate lower than the rates actually in force in France, whereas Morvan vigorously disputes that claim. Suffice it to say that there are storage 30. That provision must be read in costs which the Member States have to bear conjunction with Article 6 of the same regu- under Community law and that it follows lation, according to which: from the Decree of 1987 concerning the charge that the aim of the charge is to pay those costs. 3 — See judgment in Case 222/82 Apple and Pear Development Council* Lewis[l9ti] ECR 4122, paragraph 30. 4 — OJ 1978 L 216, p.l. 5 — OJ 1986 L 119, p. 18.

That argument thus cannot be upheld. 35. First of all, the measure must not be used to finance activities which are them- selves regarded as being contrary to Community law (see in particular the 38. In the judgment in the Irish Creamery judgment in the Apple and Pear Development case, however, the Court also referred, in Council case, cited above). As I have already the grounds but not in the operative part, to pointed out, it is for the national court to the effect which a charge may have on the determine whether part of the resources market price which is itself left to the free resulting from the storage charge are play of supply and demand and which may allocated for such activities. vary from one part of the Community to another.

36. Secondly, the levies or charges must not have the effect of interfering with the func- 39. In paragraph 20 of that judgment, the tioning of the machinery established within following may be read. the framework of the common organization of the markets for the fixing of common prices and to regulate market supply (see the judgment in the Irish Creamery Milk 'The essential aim of the machinery of the Suppliers Association case, cited above). common organizations in question is to

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OPINION OF MR MISCHO — CASE C-235/90

44. The mere fact that the use of cereals for the manufacture of compound feedingstuffs may have declined in a particular Member State has not necessarily been the result of a 41. In the present case, it may be asked charge which, throughout the period in whether, by making cereals more expensive, question, has not exceeded 0.30% of the the charge might encourage feedingstuffs intervention price for common wheat, manufacturers to turn to substitute products barley and maize and 0.20% of the inter- and thus cause cereal producers to lose vention price for durum wheat. outlets. Feedingstuffs manufacturers might, in particular, be encouraged to use 6 — See, in particular, the judgment in joined Cases 2/69 and substitute products for the part of their 3/69 Sociaal Fondi Diamantarbeiden v Brachfeld f 19691 ECR211.

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ALIMENTS MORVAN

51. I would also note that, in so far as The compatibility of the charge with Article French starch products are exported, the 92 of the Treaty repayment of the charge is lawful provided that it does not exceed the amount previously levied. Article 96 of the Treaty provides only that 'where products are 47. According to the plaintiff in the main exported to the territory of any Member proceedings, the storage charge constitutes State, any repayment of internal taxation on two counts an aid prohibited by Article shall not exceed the internal taxation 92 of the Treaty. imposed on them whether directly or indi- rectly'. I therefore take the view that the refund in question does not constitute aid which is incompatible with the common market. 48. Morvan takes the view, first, that the repayment of the charge on cereals used in the manufacture of the starch products eligible for the production refund provided for in Article 11 of Regulation No 2727/75 52. I would add that if the repayment of the constitutes such an unlawful aid. charge were an unlawful aid, it would already have been so at the time when the Community rules made provision for the production refunds to be granted in respect 49. I have already indicated that if starch of starch products, since that repayment was products imported into France are subject to made in addition to the refund. Furthermore the charge, then the repayment made in and above all, it does not follow that the favour of home-produced starch products entire machinery of the storage charge is has the effect of transforming the charge contrary to Community law, as Morvan levied on imports into a charge having equi- claims. All that would be required to regu- valent effect to a customs duty. larize the situation would be to abolish the

Conclusion

57. In the light of all the foregoing considerations, I suggest that the Court should reply to the national court's question as follows.

Community law must be interpreted as meaning that it precludes a charge such as the one at issue in the main proceedings where:

— the financial resources coming from the charge are assigned in whole or in part to expenditure for the exclusive benefit of national producers;

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ALIMENTS MORVAN