CJEC, December 16, 1970, No 13-70

THE COURT

1 By an order of 25 february 1970 received at the registry on 6 april 1970, the bundesfinanzhof has requested the court under article 177 of the treaty establishing the eec to rule " whether there is an infringement of article 37 (2) of the eec treaty when a member state, in which imports of ethyl alcohol are subject to a state monopoly, imposes as from 1 april 1966 a tax (intended to offset the fiscal charge imposed on domestic ethyl alcohol) on drinks with a wine base imported from another member state (for example vermouths) according to the content of spirits of wine exceeding a given maximum, whereas previously as a general rule it levied that tax only in cases where the original product (for example wine) had lost its particular characteristics through the addition of spirits of wine ".

2 It may be seen from the file submitted that this question relates to a state monopoly which is mainly concerned with the marketing of domestic ethyl alcohol and imports of the same product. It is further stated in the grounds of the order referring the matter that the measure which is the subject of the main action is one by which after the entry into force of the treaty the national legislature extended an existing tax to imports of products which had not hitherto been subject to it. These factors must be taken into account in deciding upon the reply to be given to the question put by the national court.

3 It was claimed that the introduction of the tax at issue does not come within article 37 (2) because it is not covered by monopolies within the meaning of that article.

4 Article 37 (2) prohibits in particular any " new measure " which is contrary to the principles laid down in paragraph (1) of the same article. Combined with one another these two paragraphs show that the expression " measure " appearing in paragraph (2) of that article is closely linked to the definition of the activities constituting a state monopoly of a commercial character as set out in the previous paragraph.

5 This definition is worded in deliberately general terms so as to include activities by which the state concerned acts only " de facto " or " indirectly " in trade between member states as well as activities by which, far from " supervising " or " determining " such trade, it is satisfied merely by " influencing " it. It follows from this that the application of article 37 is not limited to imports or exports which are directly subject to the monopoly but covers all measures which are connected with its existence and affect trade between member states in certain products, whether or not subject to the monopoly.

6 It is therefore possible that the introduction, after the entry into force of the treaty, of an import duty on a product, a constituent part of which is subject to the monopoly, may amount to a " new measure " within the meaning of article 37 (2).

7 However the aforementioned provision does not prohibit every " new measure ", but merely one which is either " contrary to the principles laid down in paragraph (1) " of the same article - that is to say, which produces or aggravates " discrimination regarding the conditions under which goods are procured and marketed exists between nationals of member states " or " which restricts the scope of the articles dealing with the abolition of customs duties and quantitative restrictions between member states ".

8 Thus it must first be ascertained whether the extension to imported products of a charge previously imposed only on similar domestic products subject to a monopoly may be regarded as amounting to discrimination regarding the conditions under which goods are procured and marketed.

9 In order to amount to discrimination regarding the conditions under which goods are procured and marketed within the meaning of article 37 (1), the new duty must have the effect of imposing higher charges on the imported product than on the similar domestic product. Such is not the case if the former is subject to the same charge as the second. There is therefore no discrimination within the meaning of the said article when the imported product is subjected to the same conditions as the domestic product subject to the monopoly.

10 It must, further, be established whether the new duty restricts the scope of the articles dealing with the abolition of customs duties and quantitative restrictions within the meaning of article 37 (2).

11 As long as the said measure has the purpose merely of applying to intra-community trade a duty which before the entry into force of the treaty was imposed only on similar domestic products, that extension does not have the effect of putting it on the footing of a customs duty or a charge having equivalent effect. Lastly, the duty in question by its nature has nothing in common with a measure having an effect equivalent to that of a quantitative restriction.

12 It is therefore appropriate to reply to the bundesfinanzhof that a duty levied on imports of products from other member states linked to the existence of a state monopoly and applied for the first time after the entry into force of the treaty does not amount to an infringement of article 37 (2), as long as such new charge is imposed on the imported product only to the same extent as on domestic products affected by the monopoly.

13 The costs incurred by the government of the federal republic of germany and by the commission of the european communities, which have submitted observations to the court, are not recoverable.

14 As these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the bundesfinanzhof, the decision on costs is a matter for that court.

The court

In answer to the question referred to it by the bundesfinanzhof by an order of that court of 25 february 1970, hereby rules:

A duty levied on imports of products from other member states linked to the existence of a state monopoly and applied for the first time after the entry into force of the treaty does not amount to an infringement of article 37 (2) as long as such new charge is imposed on the imported product only to the same extent as on domestic products affected by the monopoly.