C-45/94

JUDGMENT OF 7. 12. 1995 — CASE C-45/94

J U D G M E N T O F T H E C O U R T (Fifth Chamber) 7 December 1995 *

In Case C-45/94,

R E F E R E N C E to the Court under Article 177 of the EC Treaty by the Tribunal Superior de Justicia, Andalusia (Spain), for a preliminary ruling in the proceedings pending before that court between

Cámara de Comercio, Industria y Navegación, Ceuta

and

CÁMARA DE COMERCIO, INDUSTRIA Y NAVEGACIÓN, CEUTA v MUNICIPALITY OF CEUTA

Advocate General: G. Tesauro, Registrar: H. A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

— Cámara de Comercio, Industria y Navegación, Ceuta, by Antonio Hierro Echevarría and Antonio Hierro Hernández-Mora, of the Madrid Bar,

— Municipality of Ceuta, by Antonio Tastet Díaz, of the Granada Bar,

— the Spanish Government, by Alberto José Navarro González, Director-General for Community Legal and Institutional Coordination, and Rosario Silva de Lapuerta, Abogado del Estado, of the State Legal Department, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 18 May 1995,

gives the following

Judgment

1 By order of 16 December 1993 received at the Court on 4 February 1994, the Tri- bunal Superior de Justicia, Andalusia, referred for a preliminary ruling under Arti- cle 177 of the EC Treaty a question on the interpretation of Article 25 of the Act concerning the conditions of accession of the Kingdom of Spain and the Republic of Portugal and the adjustments to the Treaties of 12 June 1985 (OJ 1985 L 302, p. 23, hereinafter 'the Act of Accession'), and of Protocol N o 2 thereto, in conjunction with the provisions of the E E C , now the EC, and ECSC Treaties concerning the free movement of goods.

2 That question was raised in the context of a dispute between the Cámara de Com- ercio, Industria y Navegación, Ceuta, and the Municipality of Ceuta concerning an action for the annulment of a Municipal Order adopted on 24 September 1991 by the Municipality of Ceuta definitively adopting the charge (arbitrio) on production in and imports into the city of Ceuta (Boletín Oficial de Ceuta of 25 September 1991, p. 143).

3 Ceuta and Melilla are Spanish territories on the coast of N o r t h Africa. They enjoy a special status.

5 According to Article 1(2) of Protocol N o 2, the customs territory of the Commu- nity is not to include the Canary Islands and Ceuta and Melilla.

6 Article 6 of Protocol N o 2 provides:

' 1 . O n import into the Canary Islands or into Ceuta and Melilla, products origi- nating in the customs territory of the Community shall qualify for exemption from the customs duties and charges having equivalent effect under the conditions defined in paragraphs 2 and 3.

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2. The customs duties existing in the Canary Islands and in Ceuta and Melilla and the charge known as the "arbitrio insular — tarifa general" existing in the Canary Islands shall be abolished progressively, with regard to products originating in the customs territory of the Community, according to the same timetable and under the same conditions as those provided for in Articles 30, 31 and 32 of the Act of Accession.

CÁMARA DE COMERCIO, INDUSTRIA Y NAVEGACIÓN, CEUTA v MUNICIPALITY OF CEUTA

1 1 The Cámara de Comercio, Industria y Navegación, Ceuta, considering that order to be unlawful, brought an action for annulment before the Tribunal Superior de Justicia, Andalusia.

12 The national court considered that an interpretation of Community law was nec- essary for the purposes of the decision in the case. Tt therefore stayed proceedings and referred the following question to the Court for a preliminary ruling:

'Do Article 25(2) of the Act concerning the conditions of accession of the King- dom of Spain to the European Communities and Protocol N o 2 thereto, in con- junction with the provisions of the E E C and ECSC Treaties concerning the free movement of goods, allow the existence after 1991 of a charge such as the one gov- erned by Spanish Law 8/1991 of 25 March 1991 approving the Arbitrio sobre la Producción e Importación en las Ciudades de Ceuta y Melilla (charge on produc- tion in and import into the cities of Ceuta and Melilla) which is structured in such a way as to result in the "almost total absence of any additional tax burden on internal operations" while at the same time maintaining an actual charge on imports from the customs territory of the Community?'

13 It is appropriate to consider, first, the relevant articles of the Act of Accession and then those articles of the EC and ECSC Treaties which relate to the free movement of goods.

The Act of Accession

17 The purpose of Article 6(2) of Protocol N o 2 is to specify the conditions under which the result prescribed by paragraph 1 of that article, that is to say, the abo- lition of customs duties and charges having equivalent effect, is to be attained.

18 Article 6(2) must therefore be interpreted as applying both to charges having equivalent effect and to customs duties stricto sensu.

19 It follows that Article 6 of Protocol N o 2 required the customs duties and charges having equivalent effect existing in Ceuta to be abolished progressively according to the same timetable and under the same conditions as those provided for in Arti- cles 30, 31 and 32 of the Act of Accession, that is to say, by 1 January 1993 at the latest.

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20 That conclusion applies both to products imported into Ceuta from Spain and to those coming from the rest of the Community customs territory (see Joined Cases C-363/93 and C-407/93 to C-411/93 Lancry v Direction Générale des Douanes [1994] ECR I-3957).

JUDGMENT OF 7. 12. 1995 — CASE C-45/94

24 That finding is based in particular on a statement contained in one of the reports drawn up by the Directorate General of Taxes prior to the approval of the munic- ipal order at issue. According to that statement:

'The legislature has so structured the charge that it should in practice result in the almost total absence of any additional tax burden on internal operations if account is taken of the fact that industrial production and manufacture in the cities of Ceuta and Melilla is very small, so that the main burden of the municipal charge would fall on the importation of goods into Ceuta and Melilla, and that in turn would result in better protection of local production, which is largely exempt, and would make it possible to increase the revenue of local funds since trade in imported goods is one of the most characteristic activities of the aforementioned cities.'

25 However, the order for reference does not specify the reasons which enabled the national administrative authority to arrive at that conclusion. N o r does it spell out the significance of the words 'almost total' which appear both in the reports of the administrative authority concerned and in the question referred to the Court.

26 I n t h a t connection, it m u s t b e stressed that it is for the national c o u r t t o resolve a n y q u e s t i o n of fact relevant t o t h e disposal of the case before it, t o assess the scope of the national provisions a n d the m a n n e r in w h i c h t h e y m u s t be applied. T h e C o u r t of Justice may, h o w e v e r , infer from the questions referred t h e various possible h y p o t h e s e s a n d indicate, for each of t h e m , the criteria of C o m m u n i t y law which it will be for the national court to apply.

30 It follows that, in circumstances such as those in point in the present case, the national court must first ascertain whether the statutory and regulatory provisions imposing the disputed charge are such as to establish, in a transparent manner, a general system applying, on the basis of objective criteria, without distinction to local products and to imports. It must then consider whether application of those provisions satisfies those same requirements.

31 In that respect, it should be noted that, in its order for reference, the national court states: 'nor can it be maintained that the present case concerns a charge which is part of a national system of internal taxation which places equal burdens on imported goods and goods produced (within the territory of the city)'.

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32 O n that point, it is clear from the documents before the Court that the national legislation at issue lays down, separately, the system applying to imported prod- ucts and that applying to local products.

33 Although that separation could be indicative of two distinct systems of taxation, it does not, in itself, support the conclusion that Article 95 is inapplicable in the present case.

38 A first possibility is that, even though the greater part of local production is exempt, the charge is levied according to objective criteria which apply in the same manner to local and imported products. It would then fall under Article 95 of the Treaty.

39 A second possibility is that non-exempt local products belong to a defined cate- gory of products, so that the legislation must be regarded as establishing two dis- tinct systems of taxation, one applying to that category of local and imported products, the other to all other categories of imported products. While the first system would fall under Article 95, the second would introduce a charge having an effect equivalent to a customs duty.

40 A third possibility is that non-exemption of a small proportion of local production is designed solely to conceal what is in reality a charge having an effect equivalent to a customs duty.

41 It is for the national court to determine the significance of the words 'almost total' used by it in its question and to draw the appropriate conclusions in the light of the foregoing considerations.

42 As regards the argument put forward by the Spanish Government and the Munic- ipality of Ceuta to the effect that the Court, when interpreting the EC and ECSC Treaties, must take account of the isolated situation of Ceuta and the undertaking given by the Community to encourage the economic development of the less advantaged regions, it must be stated that, in the absence of specific derogating measures enacted by the Community, the provisions of the EC and ECSC Treaties concerning the free movement of goods must apply in all their force to Ceuta.

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

in answer to the question referred to it by the Tribunal Superior de Justícia, Andalusia, by order of 16 December 1993, hereby rules:

The provisions of the Act concerning the conditions of accession of the King- dom of Spain and the Republic of Portugal and the adjustments to the Treaties of 12 June 1985 and of Protocol N o 2 thereto, in conjunction with Articles 9 and 12 of the EC Treaty or Article 4(a) of the ECSC Treaty, or with

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Article 95 of the EC Treaty, preclude the levying by a Member State of a charge which, although having the appearance of internal taxation, is, either by reason of the wording of the provisions imposing it or by reason of the manner in which the administrative authority applies it, such as to be levied upon imported products or certain categories of those products, to the exclusion of local products in the same category.