JUDGMENT OF 15. 10. 1969 — CASE 14/69 MARKUS v HAUPTZOLLAMT
In Case 14/69 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht (Finance Court), Hamburg, for a preliminary ruling in the action pending before that court between
THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner, A. Trabucchi, W. Strauß (Rapporteur) and J. Mertens de Wilmars, Judges, Advocate-General: J. Gand Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Background
II — Contents of the order making the reference; reasons relied upon by the Finanzgericht
III — Procedure
IV — Summary of the observations submitted by those concerned
Grounds of judgment
The substance of the case
Costs
I —. Background
A —. (a) On 27 October 1966 the Council of the EEC adopted Regulation No 160/66/EEC. The goods directly covered by that regulation are not agricultural products within the meaning of Article 38 et seq. of the EEC Treaty, since they are not listed in Annex II to the said Treaty; they are, however, the result of the processing of agricultural products. The regulation concerns both trade between Member States and trade with third countries, which alone is of importance in the present case. In respect of these goods, Article 1 of the regulation establishes between the Member States and in respect of third countries,… a system of importation and of exportation directed towards … an equalization of the costs of procuring raw materials incorporated in the said goods and towards an improvement of the protection to be given to those goods. According to Article 2(1) the regulation applies to the goods included in the list appearing in an annex to it; among these goods there appear those which are the subject of the proceedings. Article 2(2) lists the agricultural products which, unlike the aforementioned products which result from the processing of agricultural products, are regarded as basic products within the meaning of the regulation; beet sugar and cane sugar, solid, inter alia, appear in that list. Lastly, Article 2(4) states: The Council … shall determine in respect of all goods to which this regulation applies, the quantity of basic products considered to have been used in their manufacture … According to Article 10 of the regulation There shall be levied on importation into a Member State from third countries, on goods to which this regulation applies, a charge in substitution for the customs duties levied by that Member State and which shall be composed of: a fixed component consisting of an ad valorem customs duty determined in accordance with the conditions laid down in Article 11, and intended to protect the industry producing the goods in question; a variable component laid down in accordance with the conditions provided for in Article 12, and intended to reflect, for the quantities of basic products determined in accordance with the procedure laid down in Article 2(4), the difference between the prices of those products in the importing Member State on the one hand, and the prices of imports from third countries on the other, when the total cost of those quantities of basic products is higher in the importing Member State. According to Article 11 or the regulation, the rate of the abovementioned fixed component is to be fixed by the Council in a uniform manner for all the Member States. This rate was fixed by Regulation No 83/67/EEC of the Council, adopted by virtue of Regulation No 160/66/EEC (Official Journal of 26 April 1967, p. 1597/67 et seq.). In accordance with Annex I to Regulation No 83/67/EEC, the rates of the duties imposed on the goods in question are the following: Heading number Rate of duty Rates of duty resulting from partial (autonomous) suspension 17·04-C 20.7 % 18 % 18·06-B 22.3 % 19 % According to Article 12 of Regulation No 160/66/EEC, the Commission is to fix the amount of the abovementioned variable component quarterly for each Member State. The first paragraph of Article 16 of the regulation which is the subject of the reference for a preliminary ruling is worded as follows: If upon the entry into force or this regulation the customs duty applicable to goods to which it applies is bound under GATT, and for as long as such binding continues, the total amount of the tax mentioned in Article 10, expressed as a percentage of the import price of the goods in question, may not exceed the rate of the consolidated Common Customs Tariff duty in relation to third countries. (b) The provisions of GATT which are in question here, appearing in Schedule XL of Annex B to the Protocol to the General Agreement on Tariffs and Trade signed at Geneva on 16 July 1962 (hereinafter referred to as the GATT Protocol). They are worded in the following terms, only the French and English texts being authentic: (a) The Community reserves the right to levy, in addition to the bound duty, an additional duty on sugar, corresponding to the charge borne by sugar on importation, and applicable to the quantity of various sugars (calculated in sucrose) contained in these products. Tariff heading No Description of products Rate of duty 17 04 Sugar confectionery, not containing cocoa: … … C. Other 27 % (a) … … 18 06 Chocolate and other food preparations containing cocoa: B. Other 27 % (a) … …
B —. At the end of October and the beginning of November 1967, Markus & Walsh, the plaintiff in the main action, obtained customs clearance from the relevant customs office for sugar confectionery and food preparations containing cocoa, (tariff headings 17.04-C and 18.06-B of the Common Customs Tariff) imported from the United Kingdom and the Republic of Ireland. On the basis of Regulation No 160/66/EEC the customs office levied a customs duty composed of a fixed duty calculated as a percentage of the value of the goods and of a sum in Deutschmarks.
II —. Contents of the order making the reference; reasons relied upon by the Finanzgericht
A —. On 12 March 1969, the Finanzgericht, Hamburg, decided to suspend the proceedings and to ask the Court of Justice to give a preliminary ruling on the following question:
B —. The Finanzgericht bases its order making the reference on the following grounds:
III —. Procedure
IV —. Summary of the observations submitted by those concerned
1. To the extent to which it dealt with trade with third countries, the purpose and the rationale of Regulation No 160/ 66/EEC may be summarized in the following manner:
2. The concept of bound customs duty in respect of third countries, within the framework of GATT, calls for the following observations:
3. Such was also the case in the present instance, for in addition it would be incomprehensible that the protection provided for by Regulation No 160/66/ EEC, which was therefore regarded as being necessary, should not be completely ensured, when this could have been done without infringing the rights of third parties.
1. By an order dated 12 March 1969 received at the Court Registry on 21 March 1969, the Finanzgericht, Hamburg, in accordance with Article 177 of the Treaty establishing the EEC, submitted a question on the interpretation of the first paragraph of Article 16 of Regulation No 160/66/EEC of the Council laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products. By this question the Court is asked to rule on the question whether By customs duty bound under GATT within the meaning [of the said] first paragraph of Article 16, … there must be understood solely the duty of 27 % applicable to the products under tariff heading 17.04-C and 18.06-B in Annex B (Schedule XL) to the Protocol to the General Agreement on Tariffs and Trade embodying the results of the 1960-61 Tariff Conference —hereinafter referred to as the GATT Protocol — or does that concept also include, in addition to such customs duty, the additional duty which, in accordance with footnote (a) to the tariff heading, may be levied on the sugar contained in the product.
2. According to the wording of the said first paragraph of Article 16, If upon the entry into force of this regulation the customs duty applicable to goods to which it applies is bound under GATT, … the total amount of the tax mentioned in Article 10 of the same regulation — that is to say, of the duty imposed on the importation of goods to which the regulation applies from third countries into a Member State—, expressed as a percentage of the import price of the goods in question, may not exceed the rate of the consolidated Common Customs Tariff duty in relation to third countries.
3. According to the wording of Schedule XL in Annex B to the GATT Protocol, a rate of 27 % is imposed in respect of tariff heading 17.04 for Sugar confectionery, not containing cocoa … C Other and tariff heading 18.06 for Chocolate and other food preparations containing cocoa subject to footnote (a) concerning an additional duty on sugar. This footnote provides that The Community reserves the right to levy, in addition to the bound duty, an additional duty on sugar, corresponding to the charge borne by sugar on importation, and applicable to the quantity of various sugar (calculated in sucrose) contained in these products.
4. The question raised seeks therefore to ascertain whether the maximum rate which, according to Article 16, the disputed charge may not exceed consists of the duty of 27 % laid down in the GATT Protocol or the total of that duty and the additional duty on sugar referred to in footnote (a).
5. It has been contended that the aforementioned provisions of the GATT Protocol distinguish between the bound duty —a concept which would relate solely to the rate of 27 %—on the one hand, and the additional duty on sugar , on the other.
6. Moreover, the Community provisions applicable have not defined the expressions binding and bound duty any more than did those of GATT. It is common ground that these expressions are frequently used in a wide sense to cover all the tariff concessions made by the members of GATT and to form the subject of an obligation within the framework of that agreement. Accordingly, the answer to the question raised must be deduced primarily from the reasons for and aims of Regulation No 160/66/EEC.
7. Under the terms of Article 2, this regulation applies not only to the products which are the subject of the main proceedings, but to all the goods listed in the annex thereto.
8. According to the seventh recital of the preamble to the regulation in question the introduction of the system of agricultural levies for raw materials used has altered the previously established relationships between the protection assured to third countries in respect of the production of the agricultural products in question and of the goods resulting from their processing; whereas this change results in certain cases in a considerable reduction in the advantages which the industries of the Member States producing these goods enjoyed in the Community. The eighth recital of the same preamble states: Whereas the situation thus created and the abovementioned difficulties may be overcome by the introduction of Community trade arrangements directed, on the one hand, to bringing the prices of agricultural products imported into each Member State in the form of the goods in question to the level of those ruling on the domestic market, and on the other hand, to guaranteeing protection for the industries producing those goods.
9. Taken as a whole, these factors indicate anxiety to ensure effective protection for the processing industries of the Member States against the importation of competing goods from third countries, in so far as the industries of those countries are able to obtain the basic agricultural products as prices more advantageous than those ruling in the Member States for the same agricultural products.
10. It must therefore be assumed that the authors of the first paragraph of Article 16 intended to utilize exhaustively the rights which the Community had reserved as against other members of GATT under the wording of the above-mentioned footnote (a) to Schedule XL of Annex B to the GATT Protocol.
11. This solution is confirmed by the penultimate recital of the preamble to the said regulation according to which the total amount of the taxation applicable in respect of third countries, expressed as a percentage of the import price of the goods in question, may not exceed the rate of the customs duties resulting from any undertakings entered into in respect of the said countries. In fact this, together with the following sentence in the same recital whereby the total amount of the taxation applicable in intra-Community trade … must, however, remain lower than the rate of the abovementioned customs duties, permits the converse conclusion that in extra-Community trade the authors of the regulation did not intend to renounce, even partially, the powers granted to them by virtue of footnote (a) to the provisions of the GATT Protocol in question.
12. In all these circumstances the first paragraph of Article 16 of Regulation No 160/66/EEC appears sufficiently clear, despite the lack of precision of its wording, to permit a negative reply to the first part and an affirmative reply to the second part of the question put by the Finanzgericht.
13/14. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Finanzgericht, Hamburg, the decision on costs is a matter for that court;
On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of Markus & Walsh, the plaintiff in the main action, and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 177; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to Regulation No 160/66/EEC of the Council laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products, especially Articles 2 and 10 and the first paragraph of Article 16; Having regard to the Rules of Procedure of the Court of Justice of the European Communities; THE COURT in answer to the question refered to it by the Finanzgericht, Hamburg, by order of that court of 12 March 1969, hereby rules: