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authorities carried out a search of the shed, I I I— The main proceedings and the ques- in the course of which they found vats tion referred containing alcohol with a strength of 96.2 % vol., together with jerrycans and bottles filled with gin.

8. Mr Van de Water appealed to the Gerechtshof te s'-Gravenhage (Regional Court of Appeal, The Hague) which, by judgment of 6 February 1998, ruled par- tially in his favour. As follows from the order for reference, the Gerechtshof con- sidered that the holding of alcoholic raw materials was not subject to excise duty 6. The officers who made the search con- since there had been no departure from a cluded that the excise duty on the alcohol suspension arrangement within the mean- corresponding to the products in question ing of Article 6(1) of the directive. had not been paid since none of those products was covered by customs docu- ments or suspension certificates, 5 and because no authorisation had been issued for the use of the shed as a tax warehouse.

'Can the (mere) holding of a product subject to excise duty within the meaning of Article 3(1) of the Directive be regarded — alcohol and alcoholic beverages, 7 as a release for consumption within the meaning of Article 6(1) of that Directive, if and in so far as duty has not already been levied on it pursuant to the applicable provisions of Community law and national legislation?'

— manufactured tobacco.' 8

IV — The legal context

12. In accordance with Article 5(1), 'the products referred to in Article 3(1) shall be subject to excise duty at the time of their A — Community legislation production within the territory of the Community ... or of their importation into that territory'.

14. Finally, Article 11(2) provides that 'production, processing and holding of products subject to excise duty, where the (b) any manufacture, including irregular latter has not been paid, shall take place in manufacture, of those products outside a tax warehouse.' a suspension arrangement;

(c) any importation of those products, including irregular importation, where those products have not been placed B — The Netherlands legislation under a suspension arrangement.

15. In the Netherlands, the rules on excise …' duty are contained in the Wet op de accijns (Law on excise duties, hereinafter 'the

9 — Duty also becomes chargeable when shortages are recorded as a result of losses occurring under suspension arrange- 10 — As we have seen, Article 6(1) specifies the time at which ments which are not attributable to fortuitous events or the excise duty becomes chargeable. Articles 7 and 8 force majeure or inherent in the nature of the product and, ¡n the latter case, provided that the products in question specify the Member State in which the duty is to be levied. have not been granted exemption (Article 6(1) in conjunc- 11 —This footnote concerns only the Spanish version of the tion with the provisions of Article 14(1) and (3)). present Opinion.

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12 — Staatsblad 1991, p. 561. 13 — Staatsblad 1992, p. 711. 15 — Consolidated text published in OJ C 65, p. 1, with the amendments adopted by the Court of Justice on 16 May 14 — Or at the time of importation. 2000 (OJ 2000 L 122, p. 43).

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VI — Specific aspects of the procedural ever, the Hoge Raad decided to raise it of its arguments before the Hoge Raad own motion. 16 It did so because it envi- saged the possibility of departing from the finding of the Gerechtshof on that point and ruling that the holding of alcoholic raw materials is also subject to excise duty.

24. In any event, the import of a possible 22. Those were the circumstances in which decision of the Hoge Raad on this point has Mr Van de Water brought an appeal in no bearing on the Court's reply to the cassation. Naturally, the object of this question referred to it for a preliminary appeal was to have the contested judgment ruling. Its implications would have to be set aside in so far as it upheld the assess- ment for the manufacture of gin from 96.2 % alcohol, but in no way did it seek 16 — In fact, it was the Advocate General attached to the Hoge Raad who raised the point in his opinion, when citing to dispute the Gerechtshof's rinding con- other opinions in similar cases. cerning the holding of the alcoholic raw 17 — In Spanish law, the judgment in an appeal in cassation brought in the interests of the law does not affect the material. The appellant did not raise that particular legal situation stemming from the decision issue before the Hoge Raad. Accordingly, appealed against; it merely serves to uphold the law by laying down a legal principle (see for example, Article 493 that particular decision not having been of the Ley de enjuiciamiento civil No 1/2000 of 7 January 2000 (Code of Civil Procedure — BOE No 7 of 8 January challenged by either party to the dispute, 2000) and Article 100(7) of the Ley reguladora de la the issue was initially left out of the jurisdicción contencioso-administrativa No 29/1998 of 13 July 1998 (Administrative Courts Act — BOE proceedings at the cassation stage. How- No 167 of 14 July 1998)).

18 — In this respect, the Court has consistently held that, in view 20 — The third recital in the preamble to the directive states that of the distribution of functions between it and the national the products to which it applies 'may be subject to other courts, it is not responsible for verifying whether the indirect taxes for specific purposes', before going on to decision bringing the case before it has been taken in indicate in Article 3(2) that those products (mineral oils, accordance with the rules of national law governing the alcohol and alcoholic beverages and manufactured organisation of the courts and their procedure (see the tobacco) '... may be subject to other indirect taxes for judgments in Case 65/81 Reina [1982] ECR 33, paragraph specific purposes'. 7; Joined Cases C-332/92, C-333/92 and C-335/92 Eurico 21 — See footnote 3 above. Italia and Others [1994]ECR I-711, paragraph 13; Case 22 — In the words of the first recital in the preamble to the C-472/93 Luigi Spano and Others [1995] ECR I-4321, directive, 'the establishment and functioning of the internal paragraph 16, and C-435/97 WWF and Others [1999] market require the free movement of goods, including ECR I-5613, paragraph 33). those subject to excise duties'. 19 — See point 11 of my Opinion i n EMU Tabac, cited in 23 — Paragraph 22 of the Judgment in EMU Tabac, cited in footnote 5 above. footnote 3 above.

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those duties by the Member States. It is ufactured tobacco), 25 the directive estab- essential to strike a balance so that each of lishes as a chargeable event the manufac- those objectives can be achieved without ture and importation into Community compromising the other. 24 territory of the abovementioned products. It could not be otherwise since, if the system is to be effective, the products or goods subject to duty must become dutiable when they appear on the Community market, either on being imported or on being manufactured or processed in the Community.

29. After having defined the goods to 31. Consequently, the chargeable event which it will apply and which may be the coincides with the manufacture or impor- subject of Community provisions (mineral tation into Community territory of the oils, alcohol, alcoholic beverages and man- goods subject to excise duty and the duty becomes chargeable when they are released 24 — In my Opinion in EMU Tabac, cited in footnote 5,1 have already pointed out that 'as is acknowledged in its preamble, the directive has to fulfil at the same time two 25 — See Article 3(1) of the directive. The third recital in the imperative requirements: on the one hand, "movement preamble states that 'the concept of products subject to from the territory of one Member State to that of another excise duty should be defined;... only goods which are may not give rise to checks liable to impede free movement treated as such in all the Member States may be the subject within the Community"; on the other, each State must be of Community provisions; ...'. assured that it will collect the excise duty ... in accordance with the common rules on chargeability: accordingly the 26 — '... to ensure the establishment and functioning of the latter make it "necessary to know of the movements of internal market, chargeability of excise duties should be products subject to excise duty"'. identical in all the Member States' (fourth recital).

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for consumption. As a general rule, there is operation may be performed on the goods a lapse of time between those two events concerned, in those circumstances excise and, more importantly, the Member State duty is not chargeable. in which the excise duty is chargeable may vary as a result of the intra-Community movement of the products. 27

B — The suspension arrangement and the intra-Community movement of products 35. To that end, production, processing subject to excise duty and holding of products subject to excise duty and placed under a suspension arrangement can only take place in a tax warehouse duly authorised by the Member State within whose territory it is situated; 29 33. Article 4(c) of the directive defines the the proprietor of the warehouse, the suspension arrangement as 'a tax arrange- 'authorised warehousekeeper', 30 is ment applied to the production, processing, required to comply with certain specific holding and movement of products, excise duty being suspended'. The products in question are those for which, although the 28 — Ninth recital in the preamble to the directive. 29 — See Articles 11(2) and 12 of the directive. chargeable event (manufacture or importa- 30 — Apart from the authorised warehousekeeper, the directive tion) has already occurred, excise duty has also created the categories of 'registered trader' and 'non- registered trader', distinguishable according to whether not yet become chargeable. Whatever their activities are occasional or not. A registered trader is 'a natural or legal person without authorised warehouse- keeper status, authorised by the competent authorities of a Member State to receive, in the course of his business, products subject to excise duty from another Member State 27 — The State in which the excise duty is chargeable is the State under duty-suspension arrangements ...' (Article 4(d)), of release for consumption or holding for commercial while a non-registered trader is 'a natural or legal person purposes (Article 6(2) and Articles 7, 8 and 9). It could without authorised warehousekeeper status, who is enti- also be the State in which the shortages mentioned in tled, in the course of his business, to receive occasionally Article 6(1) are recorded (see Article 6(2) in conjunction products subject to excise duty from another Member State with Article 14(3)). under duty-suspension arrangements ...' (Article 4(e)).

37. Thus, between the occurrence of the chargeable event and the time at which excise duty becomes chargeable, the pro- 36. With certain exceptions, 32 the intra- ducts subject to excise duty are isolated in Community movement of products subject such a way that they can be worked, to excise duty under a duty-suspension processed, held and transported within arrangement may take place only between Community territory, without excise duty tax warehouses. 33 In any event, the pro- ever becoming chargeable. ducts must be accompanied by a document which is drawn up by the consignor and identifies the goods transferred and, where necessary, by another document certifying that excise duty has been paid in the Member State of destination or that any other procedure for collection of duty in that State has been complied with. 34 The controls are further strengthened by the 38. Protection ends and duty becomes imposition of a general duty on traders in chargeable as soon as any action is taken outside the suspension arrangement or an irregularity or offence is committed in the 31 — Article 13 of the directive requires the authorised ware- course of an intra-Community movement housekeeper to: of goods subject to excise duty. In fact, if (a) provide a guarantee, if necessary, to cover production, processing and holding and a compulsory guarantee dutiable activities (importation or manu- to cover movement subject to the provisions of facture) take place outside a suspension Article 15(3), the conditions for which shall be set by the competent authorities of the Member State in which the tax warehouse is authorised {wording of arrangement or if departure from the Directive 94/74 cited in footnote 2); arrangement occurs at a time other than (b) comply with the requirements laid down by the the time of release for consumption, the Member State within whose territory the tax ware- house is situated; Community legislature treats those situa- (c) keep, for each warehouse, accounts of stock and product movements; tions in the same way as a release for (d) produce the products whenever so required; consumption, thereby causing them to (e) consent to all monitoring and stock checks ...'. 32 — The exceptions are those provided for in Article 5(2) (in trigger chargeability and preventing the the version resulting from Directive 94/74/EC (see footnote goods subject to excise duty from avoiding 2 above), Article 16, Article 19(4) (in the version resulting from the directive just mentioned) and Article 23(1a) tax. 36 (inserted in the text by the said Directive 94/74/EC). 33 — See Article 15(1) of the directive, in the version resulting from Directive 94/74/EC (see footnote 2 above). 34 — See Articles 7(4) and 18(1) (in the version amended by 35 — See Article 19(1) of the directive. Directive 92/108/EEC cited in footnote 2 above), (2) and (3) of the directive. 36 — See Articles 6(1) and 20(1) of the directive.

C — The holding of products subject to excise duty outside a suspension arrange- 42. I therefore believe that there is nothing ment when duty has not already been levied in the directive to prevent the mere holding outside a suspension arrangement of a product subject to excise duty from being regarded as a release for consumption 40. It was the intention of the Community where the excise duty on that product has legislature that no product subject to excise not already been paid. This is precisely the duty should be present on Community case envisaged in Article 2f of the Law territory outside a suspension arrangement which, as noted above, defines 'release' as unless excise duty had been paid. Accord- covering the holding of products subject to ingly, under the directive, the mere holding excise duty on which duty has not yet been of a product in such circumstances makes levied 'pursuant to the Law', that is to say, duty chargeable. in accordance with the rules on their manufacture, importation and disposal.

receive and dispatch products subject to 45. In its written observations, the Com- excise duty ... excise duty being suspen- mission notes that implicit in the question ded ...' (Article 4(a)). Referring to the con- raised by the Hoge Raad is the problem cept of a tax warehouse, the directive posed by the fact that the assessment, defines it as 'a place where goods subject insofar as it was based on the holding of to excise duty are ... held ... under duty- alcoholic raw materials, was sent to Mr suspension arrangements by an authorised Van de Water and not to the person who warehousekeeper ...' (Article 4(b)) and thus sold him those raw materials and who, in makes it the only premises on which '... the final analysis, was the one who illegally holding of products subject to excise duty, caused those raw materials to depart from where the latter has not been paid ...' may the suspension arrangement. However, that take place (Article 11(2)). Finally, suspen- decision, taken by the Netherlands tax sion arrangement is defined as 'a tax authorities in accordance with the Law, 40 arrangement applied to the production, is not the subject of the question referred to processing, holding and movement of pro- the Court and, accordingly, should not ducts, excise duty being suspended'.38 receive its attention.

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48. The directive identifies the products the directives on the harmonisation of duty which, under Community law, are subject rates and structures. 48 to excise duty, 42 while establishing the time at which the chargeable event occurs 43 and that at which the excise duty becomes chargeable. 44 It also specifies the State in which the excise duty is to be levied 45 and, for some cases (not including that of Mr Van de Water), the person who must pay it. 46 50. In the final analysis, what the Hoge Raad wishes to know is whether the holding of alcoholic raw materials by Mr Van de Water, the situation envisaged in Article 2f of the Law, may be regarded as a release for consumption within the mean- ing of Article 6(1) of the directive. Neither more nor less. Once this question has been 49. The Community legislature intended answered and if the reply is in the affirma- that the other chargeability conditions, the tive, the responsibility for determining the duty rate and the procedure for assessing person liable (in other words, the question and paying the duty should be those in whether Mr Van de Water should pay the force on the date on which duty became excise duty or not) will fall to the Hoge chargeable in the Member State con- Raad, which will then proceed to select and cerned. 47 In other words, it is for each interpret the legal rules applicable. Member State to establish those conditions, rates and procedures, provided, of course, it complies with the criteria laid down in

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VIII — Conclusion

52. In the light of the above, I propose that the Court of Justice should reply to the question referred by the Hoge Raad as follows:

Article 6(1) of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products does not prevent the mere holding of products subject to excise duty within the meaning of Article 3(1) of that directive from being regarded as a release for consumption where the said products are held outside a suspension arrangement and the excise duty has not already been levied pursuant to the applicable provisions of Community law and national legislation.

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