JUDGMENT OF 10. 3. 1970 — CASE 7/69 COMMISSION v ITALY

In Case 7/69

THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner (Rapporteur), A. Trabucchi, W. Strauß and J. Mertens de Wilmars, Judges, Advocate General: K. Roemer Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

(a) The imposta generale sull'entrata (IGE) applicable to imported wool obtained by the dewoolling of skins

(b) The imposta generale sull'entrata on sheep's or lamb's wool, whether or not carded or combed

II — Conclusions of the parties

III — Submissions and arguments of the parties

A — Admissibility of the application

B — The substance of the case

(a) Infringement of Article 95 by reason of the fact that the turnover tax levied on imported wool obtained by the dewoolling of skins was in excess of that on similar domestic products

(b) Infringement of Article 95 by reason of the turnover tax levied on imported carded and combed wool being in excess of that on similar national products

Grounds of judgment

Costs

I —. Facts and procedure

(a). The imposta generale sull'entrata (IGE) applicable to imported wool obtained by the dewoolling of skins

(b). The imposta generale sull'entrata on sheep's or lamb's wool, whether or not carded or combed

(a). payment of the IGE at the rate of 2.5 % on wool obtained by dewoolling of skins when it passes from the dewoolling shop to the processing works;

(b). a reduction of 3.6 % on the special additional tax provided for by Decree-Law No 1118 of 7 October 1965 and in its subsequent amendments and extensions, and applicable to new materials of wool destined to become carded and combed wool; account is taken (as regards the greasy wool referred to by the Commission in its comparison) of the fact that it is subsequently chargeable with the IGE at the rate of 2.8 % on the cost of the carding and combing processes.

II —. Conclusions of the parties

III —. Submissions and arguments of the parties

A —. Admissibility of the application

B —. The substance of the case

(a). Infringement of Article 95 by reason of the fact that the turnover tax levied on imported wool obtained by the dewoolling of skins was in excess of that on similar domestic products

(b). Infringement of Article 95 by reason of the turnover tax levied on imported carded and combed wool being in excess of that on similar national products

1. After issuing its reasoned opinion of 17 July 1968 the Commission, in an application lodged on 4 February 1969, requested the Court under Article 169 of the EEC Treaty to declare that the Italian Republic, by applying a system of turnover tax which places a heavier burden on skin wool and carded or combed wool imported from other Member States of the EEC than on similar domestic products, has failed to fulfil the obligation placed on it by Article 95 of the Treaty.

2. In a written statement submitted on 26 July 1969 the Italian Republic observed that a Decree-Law of 2 July 1969, which amended the tax system in dispute was, in its opinion, of such a nature as to call for the withdrawal of the application. The Commission replied that the provisions of this Decree-Law did not make it possible to draw the conclusion that in the present case any infringement of Article 95 of the Treaty had ceased and that consequently it could not consider any course of action other than to continue with the case.

3. However, the parties have devoted since then the major part of their arguments to the effects and the burden of the tax system brought into operation by the said Decree-Law. The Commission does not, moreover, refer to any objective other than that of putting an effective end to the specific violation alleged against the Italian Republic, so that its only aim appears to be to terminate any violation which may still exist.

4. It follows from the foregoing that, although the parties still disagree about the effects of the above-mentioned Decree-Law, they have nevertheless taken the view that this measure substantially affects the outcome of the present dispute and they have accordingly requested the Court to consider the resulting situation as a whole. In so doing the applicant has thus amended the subject-matter of its application so that it is no longer concerned only with the question whether at the time when the application was lodged there was a failure on the part of the Italian Republic to fulfil its obligations under Article 95, but principally with the question whether this failure still continues after the coming into force of the Decree-Law.

5. In the present action it is not possible for the Court to decide whether the situation created by Decree-Law No 319 is compatible with the obligations imposed upon Member States under Article 95 of the Treaty. Because of the importance which the Treaty attaches to the action available to the Community against Member States for failure to fulfil obligations, this procedure in Article 169 is surrounded by guarantees which must not be ignored, particularly in view of the obligation imposed by Article 171 on Member States to take as a consequence of this action the necessary measures to comply with the judgment of the Court. Accordingly the Court cannot give judgment in the present case on the failure to fulfil an obligation occurring after legislation has been amended during the course of the proceedings without thereby adversely affecting the rights of the Member State to put forward its arguments in defence based on complaints formulated according to the procedure laid down by Article 169.

6. In such circumstances it is for the Commission to commence new proceedings under Article 169 with regard to the effects of Decree-Law No 319, and if necessary to refer to the Court the specific shortcoming upon which it desires the Court to pronounce. In view of the change in the subject-matter of the dispute, the request as originally formulated in the application must therefore be dismissed.

7. The reason for the dismissal of the application lies in the amendment of the Italian legislation and the consequent change in subject-matter of the application, as suggested by the defendant and accepted by the applicant.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General ; Having regard to the Treaty establishing the European Economic Community, especially Articles 95, 169 and 171; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT hereby :

1 Dismisses the application;

2 Orders the parties to bear their own costs.