Court of Justice 09-07-1975 ECLI:EU:C:1975:102

I — Facts and procedure

The plaintiff in the main action put eight consignments of preserved pigmeat and preserved beef and veal from Hungary into free circulation in the Federal Republic of Germany from December 1972 to June 1973. Under the provisions of national law which were applicable charges amounting to DM 16 366,31 were levied as a result of the public health and veterinary inspection to which these imports gave rise.

The plaintiff in the main action considered that these charges were charges having an effect equivalent to customs duties and it brought the matter before the Verwaltungsgericht Köln (Cologne Administrative Court).

By an order of 21 November 1974, the Verwaltungsgericht requested the Court of Justice to answer the following question:

‘Does the expression' “the levying of any customs duty or charge having equivalent effect” within the meaning of Article 17(2) of Regulation No 121/67/EEC of the Council of 13 June 1967 on the common organization of the market in pigmeat (OJ English Special Edition 1967, p. 52) and the expression “the levying of any charge having effect equivalent to a customs duty” within the meaning of Article 20 (2) of Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal (OJ English Special Edition 1968, p. 187) also include fees charged for public health inspection of imported meat under paragraph 23 of the Fleischbeschaugesetz (Law on inspection of meat) of 29 October 1940 (BGBl, I, p. 1463 et seq.) in the version of 23 June 1970 (BGBl, I, p. 805 et seq.) read in conjunction with the Regulation on charges for inspection of imported meat of 29 February 1972 — BGBl, I, p. 265 et seq.?’

Article 17 (2) of Regulation No 121/67/EEC and Article 20 (2) of Regulation (EEC) No 805/68 provide that:

‘Save as otherwise provided in this regulation or where derogation therefrom is decided by the Council, acting in accordance with the voting procedure laid down in Article 43(2) of the Treaty on a proposal from the Commission, the following shall be prohibited:

• the levying of any customs duty or charge having equivalent effect (in Regulation (EEC) No 805/68: the levying of any charge having effect equivalent to a customs duty);

• the application of any quantitative restriction or measure having equivalent effect, subject to the provisions of the Protocol on the Grand Duchy of Luxembourg.

The restriction of import licences to a specified category of those entided to receive them shall be one of the measures considered as having effect equivalent to a quantitative restriction.’

As regards the provisions of national law which are in force in the Federal Republic of Germany, they provide for an inspection of carcasses slaughtered on the national territory or in another country before they are used to manufacture preserved meat and for the examination of imported preserved meat. In accordance with Article 23 of the Fleischbeschaugesetz of 29 October 1940, in the version of the new Law on the Authorization of Charges of 23 June 1970 and the Auslandsfleischbeschaugebührenverordnung (Regulation on Charges for Inspection of Imported Meat) of 29 February 1972, charges are levied as a result of this examination.

The Verwaltungsgericht Köln is of the opinion that the view that under Articles 9 and 13 of the EEC Treaty it is only prohibited for Member countries of the Community to impose between themselves customs duties on imports' and exports and charges having equivalent effect runs contrary to the application of the established case-law of the Court of Justice.

The order for reference was entered in the Court Registrar on 12 February 1975.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community, written observations were submitted by the plaintiff in the main action, the defendant in the main action and the Commission of the European Communities.

After hearing the report of the Judge-Rapporteur and the views of the Advocate-General, the Court decided to open the oral procedure without instituting a preparatory inquiry.

II — Summary of the written observations

The plaintiff in the main action considers that the ingredients of the concept of a charge having an equivalent effect, which has been defined in the established case-law of the Court, are the same in the field of imports from third countries as in the field of imports from Member States.

It claims that the Council's power, in the absence of express rules in the EEC Treaty, to prohibit by the regulations in question the levying of a charge having equivalent effect in trade with third countries as well follows necessarily from the existence of the customs union and the meaning of the Common Customs Tariff. Moreover an express enabling provision can be found in Article 235 of the Treaty.

The defendant in the main action points out first of all that imported fresh meat or live animals are subject to the same inspections as home-produced meat, but that on the other hand, when meat is imported in the form of ready-prepared products, it is obvious that the public and veterinary health inspection carried out by the authorities of the importing State can only apply to prepared meat.

It maintains that in a parallel action between the same parties the plaintiff in the main action has in addition contested a number of decisons of the defendant on the levying of charges for the public and veterinary health inspection of preserved meat from France. These decisons have been annulled on the grounds that the charges in question cannot be considered as consideration for administrative services within the meaning of the case-law of the Court and that they do not form part of a national system of taxation which is permissible under Article 95 of the EEC Treaty, in view of the fact that home-produced preserved meats are not subject to a similar inspection. An appeal against this decision of the Verwaltungsgericht was made to the Oberverwaltungsgericht Münster.

Since the Court is not able to apply Community law to the case in question or to give a ruling as to whether a rule of national law is compatible with the Treaty, the question referred for a preliminary ruling may be rephrased as follows:

‘Do the expresson “charge having equivalent effect” within the meaning of Article 17(2) of Regulation No. 121/67/EEC and the same expression within the meaning of Article 20(2) of Regulation (EEC) No 805/68 also include charges paid for inspections by the public health authorities carried out on meat products, when home-manufactured products of this type are not subject to similar inspections and charges although they are, however, indirectly subject to a charge levied for the public and veterinary health inspection of the meat without exception on all meat which is home-produced and the amount of which is on average considerably greater per kilogramme of cut meat than the charges to which imported meat is subject?’

Priority should be given to determining whether some charges to which both home-manufactured goods and imported products are subject and which show the characteristic features of the German charges for the public health inspection of meat must be considered as ‘internal taxation’ within the meaning of Article 95 of the EEC Treaty and therefore cannot, by their very nature, come within the expression ‘charge having equivalent effect’. The case-law of the Court of Justice on the line of demarcation between these two concepts may be summarized to the effect that taxation imposed on imported goods comes within Article 95 when it is imposed to an identical extent on home-manufactured goods or when it compensates for a charge to which home-manufactured goods of the same type are also subject' (Groeben-Boeckh-Thiesing, Kommentar zum EWG-Vertrag, Article 13, Note III). When this is ‘internal taxation’ within the meaning of Article 95, the rules relating to charges having equivalent effect cannot be applied. Since home-produced meat is subject to taxation, for identical inspections, which is in general considerably greater than for imported meat (on average 50 %), the requirements for the application of Article 95 are fulfilled (the defendant has supplied and made comments on certain figures in Schedule I to its observations). It claims that this provision only applies to trade in ‘products from other Member States’. The Member States are therefore free in theory to impose such taxation in trade with third countries. The definition of the field of application of Article 95 is the expression of sovereignty of the Member States in matters of taxation. The Treaty does not therefore provide that internal taxation must be abolished, provided that it is also imposed on imported goods, and Article 95 only requires that imported products should not be the subject of ‘any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products’.

Such a system of taxation may also extend to imported processed products, where only the raw material is subject to taxation within the country. If the national system of taxation were based on the exclusive taxation of raw materials, it would be easy when importing goods to evade this national taxation by importing products which are exclusively processed products, and this would amount to a discrimination against home-manufactured products which is hardly compatible with the objective of Article 95. It is in principle compatible with Article 95, for the same reasons, to impose a customs duty on imported meat products when internal taxation is naturally applied to fresh meat, since home-produced meat products are nevertheless directly subject to a charge of a corresponding or greater amount.

Moreover, in order to assess whether charges for the public and veterinary health inspection of meat constitute ‘internal taxation’ or ‘charges having an effect equivalent to customs duties’, it is not important to what extent the imported products have already been subject to charges imposed for inspections in the third country which is exporting them. The wording of Article 95 implies that the application of this provision is not ruled out merely because imported products and domestic products are subject to different taxation. Moreover in several of its judgments the Court has adopted the criterion whereby taxation is imposed exclusively on certain products from other Member States. It has also interpreted prohibitions on charges having equivalent effect which are contained in the organizations of markets and as regards trade with third countries by making a distinction according to whether these charges have ‘protective effects analogous to those of a levy’ on imports from third countries; conversely, it has decided from the fiscal nature of the charges whether Article 95 is applicable. However, it has not defined in detail what is meant by a charge which is imposed ‘in the same way’ . It is nevertheless unrewarding to examine whether the nature of the charge and the implementing measures are absolutely identical, and it is sufficient to determine the amount of the charge which is borne by the goods in question. In view of the facts in the present case, the difference which exists between charges levied on home-manufactured products which are as a rule levied on each item and those applied to imported goods which are levied according to the weight of these products, enables a comparison to be made with a sufficient degree of certainty between the charges which are derived from these systems of taxation.

The first part of the amended version of the preliminary question might therefore be answered in the following way:

‘Charges levied for inspection of meat products by the public health authorities do not come within the concept “charges having equivalent effect” within the meaning of Article 17 (2) of Regulation No 121/67/EEC and of Article 20(2) of Regulation (EEC) No 805/68 where home-manufactured meat products which are not subject to inspections or to analogous charges are nevertheless indirectly subject to charges for public and veterinary health inspection of meat which are levied without exception on home-produced fresh meat and the structure of which enables national courts to determine with a sufficient degree of certainty the charge which is borne by home-manufactured meat products.’

As regards the possibility of a prohibition on applying taxes having equivalent effect in trade with third countries, reference should be made to the judgment of the Court of 10 October 1973(Variola, Case 34/73, [1973] ECR 989).

However, the Directive on Trade with Third Countries of 12 December 1972 provides explicitly in Article 23(4) and Article 26 thereof that Member States may levy charges for inspections applicable to imported fresh meat. But until now there have been no express rules governing the inspections by the public and veterinary health authorities which are carried out when meat products are imported from third countries. It cannot be supposed that the prohibitions contained in Article 20(2) of Regulation (EEC) No 805/68 and in Article 17(2) of Regulation No 121/67/EEC have the same scope in a field which is not yet subject to any harmonization measures under Community law as the prohibitions laid down in a field which has already been harmonized. It is therefore inconceivable that the absence of harmonization regulations should prevent Member States from carrying out the public and veterinary health inspections which are applicable to meat products from third countries, and which are intended to protect the consumer. On the contrary, the scope of prohibitions is limited as long as inspections by the public health authorities have not been harmonized on a Community level. However, these considerations are only of interest for the purposes of the main action to the extent to which charges of the type of those in question must be considered as ‘taxes having equivalent effect’, and this is not the case. At the very least, Article 26 of the Directive of 12 December 1972 should be applied by analogy, or else flagrant distortions of competition will result to the detriment of meat products manufactured within the country from fresh meat from third countries.

Therefore the answer should be that:

‘The prohibition contained in Article 17(2) of Regulation No 121/67/EEC and that contained in Article 20 (2) of Regulation (EEC) No 805/68 are not at the present time of an absolute nature and they do not in any circumstances prohibit the levying of charges for inspections by public health authorities.’

According to the Commission the question put involves an examination of national law, but the procedure under Article 177 of the Treaty only allows an interpretation of Community law. It must therefore be understood only as relating to charges levied for the inspection of meat when it is imported from third countries, since the agricultural regulations mentioned concern trading conditions with third countries.

The question may therefore be worded as follows:

‘May charges which are levied upon crossing the frontier on products which are subject to an inspection by the public and veterinary health authorities and which are fixed on the basis of appropriate criteria and are not comparable with those which may be applied to home-manufactured products, also be considered as charges having equivalent effect when the imported goods come from third countries? In particular is the meaning of the concept“charges having equivalent effect” as it it used in the regulations on the common organization of the markets as regards trade with third countries identical with the expression used in the Treaty and in these same regulations when they refer to intra-Community trade?’

The first question is whether the meaning of the concept ‘charges having equivalent effect’ is identical in the agricultural regulations and in Articles 9, 12 et seq. of the Treaty, and then a distinction must be made between trade within the Community and trade with third countries. As regards intra-Community trade, the Court has given the ruling that the regulations in question were pursuing the objectives laid down in Articles 9, 12 et seq. in the spheres to which they relate. On the other hand, the Treaty does not lay down any prohibition on levying charges having equivalent effect in the sphere of trade with third countries except indirectly where the operation of the Common Customs Tariff is compromised (Joined Cases 2 and 3/69, Sociaal Fonds voor de Diamantarbeiders v SA Ch. Brachfeld & Sons and Chougol Diamond Co., [1969] ECR 211 to 225). The Community legislature has however the power to enact such a prohibiton under secondary law, because a charge having equivalent effect constitutes an instrument of commercial policy.

The Court has acknowledged that the meaning of the concept in both contexts is identical (Case 43/71, Politi s.a.s. v Minister of Finance of the Italian Republic, Rec. 1971, p. 103 et seq.; Case 84/71. S.p.a. Marimex v Minister of Finance of the Italian Republic, Rec. 1972, p. 89; the operative part of the judgment delivered in the latter case expressly mentions Article 20 (2) of Regulation (EEC) No 805/68, which is also applicable in this case).

On the contrary a difference may be found in the extent of the prohibition. In fact, the levying of charges having equivalent effect in respect of third countries is not absolutely prohibited in the organizations of the markets in beef and veal and in pigmeat, but only:

‘save as otherwise provided in this Regulation or where derogation therefrom is decided by the Council, acting in accordance with the voting procedure laid down in Article 43 (2) of the Treaty on a proposal from the Commission’ (Article 17 (2) of Regulation No 121/67/EEC and Article 20(2) of Regulation (EEC) No 805/68).

In these circumstances, it is possible that the same actual measure may be judged differently according to the type of trade in question. Thus a system of granting licences has been prohibited in the sphere of intra-Community trade, but is, as regards trade with third countries, compatible ‘in the present state of the law, with the structure of the imports system applicable to fruit and vegetables’ (Joined Cases 51 and 54/71, Rec. 1971, p. 1107).

Without prejudice to any international obligations which may exist, the Community legislature is therefore free to fix the scope of the prohibition which has been enacted in respect of third countries and to make it an instrument of commercial policy. The provisions of the Directive of the Council of 12 December 1972 on public and veterinary health problems and for the public and veterinary health authorities when cattle and pigs and fresh meat from third countries are imported (72/462/EEC, OJ L 302 of 31. 12. 1972, p. 28), concerning the imposition of charges relating to measures taken by the public and veterinary health authorities may constitute an exception where the charges which are levied on imports for inspection are charges having equivalent effect. But such an exception only applies to cattle and pigs and fresh meat and not to the meat preparations involved in this case, in respect of which there are no other exceptions provided. Therefore the prohibition must be adhered to to its full extent.

However this result is not satisfactory since cattle and pigs, meat and meat preparations come within the same organization of the markets and only the harmonization of public and veterinary health problems has not yet been completed. But to attain the objective laid down in the common organization of the market a uniform treatment of the question of charges relating to the importation of goods from third countries is required, and if meat preparations imported from third countries were to be inspected without charges being levied as a result, the Community meat-processing industry would find itself put at a disadvantage to the extent to which it processed fresh meat imported from third countries for which inspection charges are levied at the frontier. The result of these considerations cannot, however, be to maintain that there is also an exception in respect of meat preparations, in anticipation of the regulations envisaged, and therefore an authorization to levy these charges to the extent to which the charges levied constitute charges having equivalent effect

The plaintiff in the main action, represented by Mr Röll, Advocate at the Hamburg Bar, the defendant in the main action, represented by Mr Sedemund, Advocate at the Cologne Bar and the Commission of the European Communities, represented by Mr Matthies, its Legal Adviser, acting as Agent, presented oral argument at the hearing on 28 May 1975.

The Advocate-General delivered his opinion at the hearing on 18 June 1975.

Costs

5 The costs incurred by the Commission of the European Communities which has submitted its observations to the Court are not recoverable and as the proceedings are, so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.