CJEC, 6th chamber, August 2, 1993, No C-266/91

THE COURT (Sixth Chamber),

1 By order of 10 July 1991, received at the Court on 16 October 1991, the Supremo Tribunal Administrativo (Supreme Administrative Court), Lisbon, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty five questions concerning the interpretation of Articles 9, 12 et seq., 30, 92 and 95 of the EEC Treaty.

2 Those questions have arisen in a dispute between the company Celulose Beira Industrial (hereinafter "Celbi") and the Fazenda Pública (Ministry of Finance) concerning recovery of a sum of ESC 6 060 398 corresponding to the outstanding amount of a parafiscal charge on chemical pulp.

3 That charge was imposed by Decree-Law No 75-C-86 of 23 April 1986. At the material time, it was payable on sales of chemical pulp at a rate equivalent to 0.45% of the total value of the transaction, irrespective of whether the goods were domestic or imported.

4 That charge was, inter alia, intended to finance the Instituto dos Produtos Florestais (Forestry Products Institute, IPF), a financially autonomous economic coordination body with legal personality, which was established in 1972 and abolished in 1988. The IPF' s tasks were inter alia to coordinate and regulate the activities covering production, processing and marketing of wood, cork, resins, along with their derivatives and by-products, to regulate the conditions governing their supply, along with the exportation and importation of such products, to promote the sale of those products abroad, to certify their origin, quality and weight, and to carry out technical and economic studies.

5 In order to perform those tasks, the IPF was required, inter alia, to collaborate in the promotion and expansion of trade on foreign markets in the products in question, to defend their good reputation and proper value, and to grant credit and other forms of financial aid.

6 In May 1987, Celbi sold a quantity of chemical pulp, without paying the corresponding charge. The IPF accordingly instituted enforcement proceedings against it for recovery of the charge before the Tribunal Tributario de Primeira Instância (Fiscal Court of First Instance) in Coimbra, which upheld the IPF' s contention. That decision was confirmed, on appeal, by the Supremo Tribunal Administrativo (Supreme Administrative Court). Celbi thereupon brought the matter at final instance before the Secção de Contencioso Tributario (Appeals Chamber) of the Supremo Tribunal Administrativo, which decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

"1. Does the concept of a charge having an effect equivalent to an import customs duty referred to in Articles 9, 12 et seq. of the Treaty of Rome extend to a charge levied by a public institute on the sale of chemical pulp, without distinction between domestic and imported products, the proceeds of which finance the activities of that body (specifically the IPF, whose objects are laid down in Chapter I of Decree-Law No 428-72.10.31)?

2. To what extent does the legally prescribed use of the receipts of a charge levied on both domestic and imported products affect the application of Article 95 and justify its being classified as a charge having equivalent effect?

3. (In the event of an affirmative answer to the first two questions): To what extent does the requirement that 'the charges imposed on the domestic product are made good in full' laid down in Community case-law refer to monetary equivalence between the amount of the charge levied on domestic economic agents and the advantages accruing to them or could it rather be understood as a requirement relating to the nature and extent of and the necessity for services provided for the benefit of the domestic product which (like all the activities of the said body) are financed by the receipts from the levying of the charge in accordance with the said legislation?

4. Can the use of the receipts from a charge levied on domestic and imported products for the activities undertaken by the said body be regarded as a State aid for the purposes of Article 92?

5. Can the levying of a charge representing a percentage of the total value of the sales of the domestic and imported product and intended to finance the activity of a public institute which takes the action mentioned in the legislation constitute an infringement of Article 30 of the Treaty of Rome?"

7 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

The first and second questions

8 In its first and second questions, the national court seeks elucidation on the concept of a charge having an effect equivalent to a customs duty, referred to in Article 12 et seq. of the EEC Treaty, on that of discriminatory internal taxation under Article 95 of that Treaty, both considered with regard to a parafiscal charge such as that at issue in the main proceedings, and on the relationship between those two concepts.

9 The Court has consistently held (see, in particular, Joined Cases C-149-91 and C-150-91 Sanders Adour and Guyomarc' h Orthez Nutrition Animale v Directeur des Services Fiscaux des Pyrénées-Atlantiques [1992] ECR I-3899, paragraph 14) that provisions relating to charges having equivalent effect and those relating to discriminatory internal taxation cannot be applied together, so that under the system of the Treaty the same imposition cannot belong to both categories at the same time.

10 So far as charges having equivalent effect are concerned, it is also settled case-law that their prohibition covers all charges levied at the time of, or by reason of, importation, which are imposed specifically on an imported product but not on a similar domestic product, and that even pecuniary charges intended to finance the activities of an agency governed by public law can constitute charges having equivalent effect (see, in particular, Joined Cases C-78-90 to C-83-90 Compagnie Commerciale de l' Ouest and Others v Receveur Principal des Douanes de La Pallice-Port [1992] ECR I-1847, paragraph 23).

11 In the case of a general system of internal charges applying systematically to domestic and imported products according to the same criteria, the provisions of Article 95 of the Treaty must apply. That article prohibits Member States from directly or indirectly imposing on the products of other Member States any internal taxation in excess of that imposed on similar domestic products or of such a nature as to afford protection to other domestic products. The applicability of the provision in question therefore depends on whether or not the internal taxation measure is discriminatory or protective (see, in particular, Case C-17-91 Lornoy and Others v Belgium [1992] ECR I-6523, paragraph 19).

12 Finally, it may be necessary (see, in particular, the judgments cited above) to take account of the intended use of the revenue from the monetary charges levied, both in the context of Article 12 et seq. and in that of Article 95 of the Treaty.

13 The Court has held that a charge forming part of a general system of internal charges applying systematically to both domestic and imported products may none the less constitute a charge having an effect equivalent to a customs duty on imports if the revenue from it is exclusively intended to finance activities which specifically benefit domestic products and offset in full the burden on them. In such a case, that charge does indeed constitute a net financial burden for imported products, whereas, for domestic products, it represents only the consideration for advantages received.

14 However, even if it is applicable without distinction, that charge will none the less constitute a breach of the prohibition of discrimination set out in Article 95 of the Treaty if the advantages resulting from the use to which the revenue from it is put are specifically of benefit to the domestic products on which it was levied, by offsetting part of the burden on them and thereby placing imported products at a disadvantage.

15 The answer to the national court' s first and second questions must therefore be that a parafiscal charge applicable without distinction to domestic and imported products constitutes a charge having an effect equivalent to a customs duty prohibited under Article 12 of the Treaty if the revenue from it is appropriated wholly to finance advantages exclusively benefiting domestic products, thereby fully offsetting the burden on them. If, on the other hand, that revenue is used only partially to provide such advantages, which thus offset only part of the burden on domestic products, the charge will constitute discriminatory taxation prohibited by Article 95 of the Treaty.

The third question

16 By its third question, the national court seeks elucidation on the scope of the criterion of whether the burden is offset. It wishes in particular to ascertain whether that criterion relates to a financial equivalence between the amount of the charge levied on domestic producers and the advantages received by them, or whether it implies an assessment relating more generally to the nature, scale and indispensable nature of the services provided, without its being necessary to establish any mathematical correspondence with the amounts levied.

17 The ratio decidendi of the above case-law on the intended use of the revenue from a charge applied without distinction as well as the offsetting of any burden from that charge rests on the finding that, in economic terms, the advantages financed by the revenue from such a charge constitute, for domestic products, the consideration for the amounts paid, the burden of which is thereby offset in full or in part. For imported products, on the other hand, which are excluded from those advantages, the charge represents a net additional financial burden.

18 In those circumstances, the criterion of whether the burden is offset, in order to be usefully and correctly applied, presupposes a check, during a reference period, on the financial equivalence of the total amounts levied on domestic products in connection with the charge and the advantages afforded exclusively to those products. Any other parameter, such as the nature, scope or indispensable character of those advantages would not provide a sufficiently objective basis on which to determine whether a domestic fiscal measure is compatible with the provisions of the Treaty; furthermore, it would not be sufficiently precise to allow the Member State concerned to re-establish, with certainty, a situation of legality in the event of a breach of either Article 12 or Article 95 of the Treaty.

19 The answer to the national court' s third question must therefore be that the criterion of the offsetting of the burden on the domestic product is to be construed as requiring financial equivalence, to be verified over a reference period, between the total amount of the charge imposed on domestic products and the advantages exclusively benefiting those products.

The fourth question

20 In its fourth question, the national court poses the problem of whether a charge such as that at issue in the main proceedings is compatible with the Treaty provisions on State aid.

21 While a parafiscal charge may come within the scope of either Article 12 or Article 95 of the Treaty, the use of the revenue from that charge to benefit domestic products may none the less constitute State aid which may be incompatible with the common market if the conditions set out in Article 92 of the Treaty, as interpreted by the Court, are fulfilled.

22 It has, however, consistently been held that the incompatibility of State aid with the common market is neither absolute nor unconditional. The intention of the Treaty, in providing through Article 93 for aid to be kept under constant review and supervised by the Commission, is that any finding that an aid is incompatible with the common market should result from an appropriate procedure whose implementation is a matter for the Commission, subject to review by the Court. Individuals cannot therefore simply, on the basis of Article 92 alone, challenge the compatibility of an aid with Community law before the national courts or ask them to decide as the main or a subsidiary issue on any incompatibility (see, in particular, Lornoy).

23 It is, however, incumbent on the national courts to safeguard the rights of individuals when faced with any disregard by national authorities of the prohibition on the implementation of aid, which is set out in the final sentence of Article 93(3) of the Treaty and is directly effective. Such disregard, if relied on by individuals and confirmed by the national courts, must lead those courts to draw from it all the consequences in accordance with their national law with regard both to the validity of acts implementing aid measures and to the recovery of the financial support granted. Their decisions do not, however, imply an assessment of the compatibility of the aid with Community law, which, as already pointed out, is a matter within the exclusive competence of the Commission, subject to review by the Court (see Case C-354-90 Fédération Nationale du Commerce Extérieur des Produits Alimentaires and Syndicat National des Négociants et Transformateurs de Saumon v French State [1991] ECR I-5505).

24 The answer to the national court' s fourth question must therefore be that the use made of the revenue from a parafiscal charge, such as that at issue, may constitute a State aid incompatible with the common market if the conditions set out in Article 92 of the Treaty are fulfilled; however, such a determination is a matter for the Commission and may be made only after the procedure provided for in that regard by Article 93 of the Treaty.

The fifth question

25 The national court' s fifth question seeks essentially to ascertain whether a parafiscal charge such as that at issue in the main proceedings can be assessed in relation to Article 30 of the Treaty.

26 In order to reply to that question, suffice it to note that, according to settled case-law, charges having equivalent effect to customs duties and barriers of a fiscal nature, covered by Articles 9 to 16 and by Article 95 of the Treaty respectively, do not fall within the scope of Article 30 (see, in particular, Case 74-76 Iannelli & Volpi v Meroni [1977] ECR 557 and Lornoy).

27 Since, as indicated above, it is governed by either Article 12 et seq. or by Article 95 of the Treaty, a parafiscal charge such as that at issue in the main proceedings cannot fall within the scope of Article 30 of the Treaty.

28 The answer to the national court' s fifth question must therefore be that since a parafiscal charge such as that at issue in the main proceedings is governed by Article 12 et seq. or Article 95 of the Treaty, it does not fall within the scope of Article 30 thereof.

Costs

29 The costs incurred by the Portuguese and French Governments and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Sixth Chamber),

in answer to the questions referred to it by the Supremo Tribunal Administrativo, Lisbon, by order of 10 July 1991, hereby rules:

1. A parafiscal charge applicable without distinction to domestic and imported products constitutes a charge having an effect equivalent to a customs duty prohibited under Article 12 of the EEC Treaty if the revenue from it is appropriated wholly to finance advantages exclusively benefiting domestic products, thereby fully offsetting the burden on them. If, on the other hand, that revenue is used only partially to provide such advantages, which thus offset only part of the burden on domestic products, the charge will constitute discriminatory taxation prohibited by Article 95 of the Treaty.

2. The criterion of the offsetting of the burden on the domestic product is to be construed as requiring financial equivalence, to be verified over a reference period, between the total amount of the charge imposed on domestic products and the advantages exclusively benefiting those products.

3. The use made of the revenue from a parafiscal charge, such as that at issue, may constitute a State aid incompatible with the common market if the conditions set out in Article 92 of the Treaty are fulfilled; however, such a determination is a matter for the Commission and may be made only after the procedure provided for in that regard by Article 93 of the Treaty.