JUDGMENT OF 17. 6. 1971 — CASE 3/71 BAGUSAT v HAUPTZOLLAMT BERLIN

In Case 3/71 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht (Finance Court) Berlin for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, A. M. Donner and A. Trabucchi, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore (Rapporteur) and H. Kutscher, Judges, Advocate-General: A. Dutheillet de Lamothe Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

II — Observations submitted to the Court

A — The first question

B — The second question

C — The third question

Grounds of judgment

The first question

The second and third questions

Costs

I —. Facts and procedure

(a). May Article 2 of Regulation No 865/68 in conjunction with Article 9 of that regulation and with the provisions of the Common Customs Tariff (Additional Note 2 to Chapter 20, tariff heading 20.06 B I (e)) be interpreted as meaning that when the sugar content established by refractometry exceeds 9 % by weight it is necessary to consider that there is added sugar, or must it be considered that in accordance with Regulation No 865/68 the goods (in this case, morello cherries in spirit) can be subject to the levy only if sugar has in fact been added to them?

(b). On the assumption that a sugar content in excess of 9 % by weight must be regarded as added sugar within the meaning of Regulation No 865/68, and that it is irrelevant whether sugar has in fact been added, is this rule compatible with the objectives of Regulation No 865/68?

(c). If the answer to the second question is in the negative, does it follow from the incompatibility thus established that there has been an infringement of Community law such as to make it impossible to impose the levy, or must that levy nevertheless be imposed despite the fact that such was not the intention of the Community legislature?

II —. Observations submitted to the Court

A —. The first question

(a). The fixed method (Article 2 (2)) is based on fixed average coefficients of sugar content for the various products mentioned in Column 1 of Annex I to the Regulation; the amount of the levy is determined for 100 kg net of imported products, by multiplying this average coefficient — regarded as corresponding to the added sugar content — by the levy applicable to sucrose.

(b). The individualized method (Article 2 (3) and (4)) is based on finding the total sugar content by using the method of measuring dry soluble residue in products processed from fruit and vegetables by refractometry (described in Annex HI to the regulation), taking into account a technical correction factor; the added sugar content is considered as the difference between the figure obtained by the method of measuring by refractometry and the figure appearing in column 2 of Annex I, the latter being regarded as corresponding to the natural sugar content. The amount of the levy is determined by multiplying that difference by the levy applicable to sucrose.

B —. The second question

C —. The third question

(a). With regard to the requirements of Article 190 of the EEC Treaty, Regulation No 865/68 is properly reasoned: it appears clearly from the recitals in the preamble thereto that only the constituent added sugar is subject to a levy, in order to make the rules on the sugar market effective. This implies that the natural sugar contained in the products covered by that organization of the market must not be subject to any levy.

(b). That imposition is also contrary to the prohibition on discrimination:

(c). The imposition of a levy on cherries in spirit without added sugar further violates the principle, which is also in force in Community law, that the means used must be proportional to the objective to be achieved.

(d). According to Article 18 or Regulation No 865/68 the latter must be so applied that appropriate account is taken, at the same time, of the objectives set out in Articles 39 and 110 of the Treaty.

(e). Lastly, it should be pointed out that the multilateral convention concluded within the framework of the Conference on Trade held from 1964 to 1967 in Geneva which the Council signed for the Community, by a decision of 27 November 1967, reserved to the Community the right to levy in addition to the bound customs duty an additional duty corresponding to the import charge on sugar; heading 20.06 B I is exempt from the reservation and it follows from this that no levy may be imposed on products under that heading.

(a). T he method of calculation laid down by the regulation and its form are mere procedures and consequently require no special reasons to be given. The reasons given as the basis of the regulation in question satisfy the requirements laid down by the Court: the choice of a method of calculation which prescribes recourse to fixed rates and necessarily results in differences from real values is in no way so unusual that a special mention would have had to be made of it in the statement of the reasons on which the regulation is based.

(b). To raise the objection of discrimination is problematical within the framework of tariff law: customs duties are not fixed according to proper scientific methods, but are the culmination of a long historical process.

(c). The means prescribed by Regulation No 865/68 are in proportion to its objective. The method of calculation which it prescribes is appropriate; the average values of the sugar content of morello cherries have been fixed in accordance with an essential and reasonable standard.

(d). Products under heading 20.06 B I represent only a small fraction of the processed products coming within Regulation No 865/68 and are relatively unimportant in terms of trade. On the other hand the Community legislature has taken account in the choice of method of the requirements of international trade and of the interests of the Member States.

(e). The commitments governed by international law which were entered into by the Community within the framework of GATT cannot confer particular rights for private individuals. In any case the Community made no concession as regards tariff heading 20.06 B I: the latter does not include either a bound customs duty or a bound restriction on the imposition of a levy on sugar in the future.

1. By order of 12 January 1971, received at the Court on 26 January 1971, the Finanzgericht, Berlin, has asked the Court, under Article 177 of the EEC Treaty, to give a preliminary ruling on certain questions concerning the interpretation and validity of Regulation No 865/68 of the Council of 28 June 1968 on the common organization of the market in products processed from fruit and vegetables (OJ English Special Edition 1968 (1) p. 225).

2. The first question asks whether Article 2 of Regulation No 865/68, in conjunction with Article 9 of that regulation and with the rules on the Common Customs Tariff (Additional Note No 2 to Chapter 20, tariff heading 20.06 B I (e), may be interpreted as meaning that when the sugar content of the imported product, in this case of cherries in spirit, ascertained by refractometry exceeds 9 % by weight it must be considered that they contain added sugar, or whether the levy may be imposed only if sugar has in fact been added.

3. Under Article 2 (1) of Regulation No 865/68 a levy on the various added sugars may in certain circumstances be imposed in addition to the customs duty which can be demanded under this regulation. This levy is determined in accordance with the conditions laid down by paragraphs (2) to (6) of the same Article, including Annexes I and III, which respectively lay down fixed sugar contents and a method of analysis whereby in certain circumstances the true sugar content can be determined by way of exception to the fixed values. Article 9 (2) of the same Regulation provides moreover that The general rules for the interpretation of the Common Customs Tariff and the special rules for its application shall apply to the tariff classification of the products covered by this Regulation. Under Additional Note No 2, appearing at the head of Chapter 20 of the Common Customs Tariff fixed by Regulation No 950/68 of 20 June 1968 (OJ L 172, p. 86), The products classified under heading No 20.06 shall be considered as containing added sugar when the sugar content thereof exceeds by weight the percentages given hereunder, according to the kind of fruit concerned:… other fruits … 9 %.

4. The plaintiff in the main action claims that the levy prescribed by Article 2 (1) of Regulation No 865/68 is applicable only if sugar has in fact been added to the product in question. According to the view of the customs authorities, put forward before the national court and supported by the Commission before the Court, the standard methods established by Regulation No 865/68, in conjunction with the abovementioned Additional Note to the Common Customs Tariff, created a legal fiction or presumption according to which any sugar content, even if natural, must be regarded as added sugar as soon as the proportion of sugar exceeds the percentage specified.

5. The preamble to Regulation No 865/68 states that the aim of Article 2, which introduces a levy on added sugar, is to ensure that the trading system for certain products processed from fruit is brought into line with that laid down for sugar itself, so that the sugar incorporated into processed products is subject to a levy under conditions similar to those applied within the framework of the common organization of that market. Hence, it would be incompatible with the system adopted by Regulation No 865/68 if the natural sugar content of products processed from fruit were subjected to the levy. This conclusion follows from Article 2 (1) which provides that the basis of charge of the levy is not the sugar content, but the various added sugars.

6. This interpretation is not affected by Additional Note No 2 to Chapter 20 of the Common Customs Tariff, since this provision, incorporated in a regulation concerning customs duties, cannot alter the basis of charge of an agricultural levy, especially since it is referred to by Article 9 (2) of Regulation No 865/68 only for the purposes of tariff classification of the products to which the regulation relates. Accordingly, this additional note can have no other purpose except to give guidance, on the basis of the total sugar content, to facilitate the tariff classification of products within the category of fruit subject either to a customs duty and a levy, or to a customs duty alone. In view of the provisions of Regulation No 865/68, the effect of that note is to establish that products with a sugar content of less than 9 % are exempt from the levy, whilst creating, in the case of products with a higher sugar content, a presumption with regard to classification against which evidence in rebuttal may be brought. When such a product has a sugar content exceeding 9 %, it is therefore open to the importer to prove, where appropriate, that it contains only natural sugar.

7. The answer must therefore be given that the provisions of Article 2 of Regulation No 865/68, in conjunction with Additional Note No 2 to Chapter 20 of the Common Customs Tariff, to which reference is made by Article 9 of the same regulation, subject to the levy only those products processed by the actual addition of sugar, but that if the sugar content of a product corning under tariff heading 20.06 B I (e) exceeds 9 %, it is for the importer to prove that the product contains only natural sugar.

8. The second and third questions are put on the assumption that a sugar content exceeding 9 % by weight must, as a matter of law, be deemed, without its being permitted to bring evidence in rebuttal, to constitute added sugar within the meaning of Regulation No 865/68.

9. In view of the answer given to the first question, these two questions no longer have any purpose.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of 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 the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the questions referred to it by the Finanzgericht, Berlin, by order of that court of 12 January 1971, hereby rules: