Opinion of Mr advocate-general Gand

Mr President,

Members of the Court,

The present dispute between the Commission of the European Communities and the Government of the Italian Republic turns on the compatibility of Italian legislation concerning excise duty on products obtained by the processing of cocoa beans with Article 95 of the EEC Treaty.

I

In order to understand the provisions in dispute and to make a better evaluation of the arguments of the parties two observations must first be made.

First, the products in question are obtainable in Italy either imported already processed or by the processing of the raw material: cocoa beans. Since this product always originates abroad it must be imported, which by law involves the levying of an excise duty; the comparisons which I shall make relate to the amounts of the duty levied on imports of the processed product and of the raw material respectively.

Secondly, it will be helpful to give some indication of the various stages of processing necessary for the use of cocoa beans.

In this connexion I shall refer to the Explanatory Notes to the Brussels Nomenclature (Article 1801 et seq.).

Cocoa beans—which should more accurately be called cocoa seeds—are contained in the fruit of the cocoa tree, each cocoa-pod containing between 25 and 80 beans. They consist of an external covering, the husk and a very thin internal skin covering the kernel. This kernel is the usable part of the bean. Cocoa beans are roasted to facilitate removal of the husk and to render the kernels more friable, as well as to develop their flavour. Then they pass through rollers, which break up the beans and detach the germ; they are then decorticated to separate the shells, husk and germ from the broken pieces of kernel. The shells, husk and germ are waste products which play an important role in the present case. Cocoa paste is obtained by grinding the kernels and may be sold directly to confectioners and pastrymakers, but is mainly used to produce cocoa butter and cocoa powder and is thus a semiprocessed product for use in the chocolatemaking industry.

Cocoa butter is the term used to cover the oils and fats contained in the bean which are generally obtained by pressing cocoa paste or the whole bean. Cocoa powder is obtained by pulverizing cocoa paste, which has first been more or less thoroughly defatted. The latest Italian law, for instance, charges tax at different rates according to whether the cocoa powder has a content in oils and fats higher or lower than 1 %.

Such being the case, pressing techniques enable the processing industry to choose between the various products which may be derived from cocoa beans, and to draw up a production programme in which the quantities of cocoa butter and cocoa powder, as well as their content in oils and fats, may be varied. From the legal point of view, processors may import the raw material either for domestic consumption or temporarily, their choice depending on their plans for the export of processed products and also on the more or less favouarble system of taxation imposed on them by the legislature.

II

It is the system adopted by the Italian legislature which has given rise to the present case and which we must now analyse.

III

1. The Commission considers that Article 95 was first infringed by the fact that cocoa powder directly imported from other Member States bears a heavier duty than powder put on the market in Italy after it has been produced there by milling beans imported under the temporary import system.

2. The Commission also considers that there has been an infringement of the same article of the Treaty—and this is its second complaint—in that the duty is higher on cocoa powder, butter, shells and husks imported directly from other Member States than on such products obtained in Italy by milling cocoa beans originally imported for domestic consumption.

3. I shall merely mention for the record the third submission put forward by the Commission in its application: it related to the fact that the refund of the excise duty on exports of products obtained in Italy by milling cocoa beans exceeded the amount of the duty actually paid and was thus contrary to Article 96 of the Treaty.

To conclude, then, I am of the opinion :

1 Translated from the French.