JUDGMENT OF 12. 12. 1973 — CASE 131/73 GROSOLI
In Case 131/73 Reference to the Court under Article 177 of the EEC Treaty by the Tribunale (Sezione Penale) of Trent, Italy for a preliminary ruling in the criminal proceedings before that Court against
THE COURT composed of: R. Lecourt, President, M. Sørensen, President of Chamber, P. Pescatore (Rapporteur), R. Monaco, J. Mertens de Wilmars, H. Kutscher and C. Ó Dálaigh, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure
II — Observations presented before the Court
A — On the first question
B — On the second question
Grounds of judgment
Costs
I —. Facts and procedure
1. Breach of Article 110 of the Italian Penal Code and Article 102 of Customs Law No 1424 of 25 September 1940 in that, acting in concert, the first-named as responsible partner of the limited liability company, Grosoli and Co., the second-named as manager, they put 20754 kg of frozen beef and veal to uses other than direct consumption and thereby avoided payment of the agricultural levies, amounting to 5721245 lire, applicable to imports from third countries;
2. Breach of Article 110 of the Penal Code, of Article 4 of Law No 570 of 31 July 1954 and of Article 3 of Law No 418 of 20 March 1968 in that, acting in concert and in the aforementioned capacities, they avoided payment of turnover compensation tax amounting to 188000 lire on the quantity of meat referred to under (1) above.
1. Under Article 3 of Regulation No 92/68 of 23 January 1968 and Article 2 of Regulation No 110/69 of 16 January 1969, taken together, could Member States adopt provisions prescribing a use for the consignments allocated to them?
2. If the answer is in the affirmative, in the event that importers to whom consignments had been allocated failed to comply with the requirement as to use, could Member States impose pecuniary penalties on them based on the amount of the levy?
II —. Observations presented before the Court
A —. On the first question
1. The establishment of a common agricultural policy and, particularly, of a common market organization has, in the sector concerned, resulted in the transfer of all legislative powers from the Member States to the Community; this is why policy options in the economic field are open only to the institutions of the Community. This conclusion is based on Article 40 of the EEC Treaty and the body of secondary agricultural law. It is also reflected in Regulations No 92/68 and No 110/69. These Regulations, which are concerned with allocation of the Community tariff quota of frozen beef and veal, took into account, on one hand, the requirements of each Member State and, on the other, the stocks built up in some of these States; as it happened, they declared in favour of allotting shares. These were decisions of expediency reflecting a choice of economic policy; the use to which the goods were to be put was of the same order. The silence of the Regulations on this point goes to show that, particularly because of the comparatively small part of the overall import requirements represented by the quota and of the build-up of reserves in certain Member States as a result of intervention measures, the Council intended not to prescribe the use to which frozen meat imported under the GATT quota would be put.
2. Member States cannot, by using the powers of administration conferred on them, affect this intention on the part of the Council: those powers are derived not from the autonomous and residual jurisdiction of the States but from jurisdiction expressly delegated by the Community and which, on this account, is to be strictly interpreted. In the present case, the concept of administration comprehends nothing more than a set of technical rules whose object is to facilitate access to the quota for all potential users and to ensure that the whole of the quota is taken up; the concept in no sense involves power to prescribe a use to which the goods must be put.
3. Study of the preambles to Regulations No 92/68 and 110/69 indicates that the Council was activated by concern not only to meet the requirements of each Member State but also to avoid disturbance of the common market. To have granted Member States power to prescribe the use to which imported meat must be put would have been to disregard this second objective: Member States could have disturbed the common market if they were in a position, by reserving the quota for stock-piling perhaps, to impose conditions on free access to the quota allocated to them.
4. The nature of the quota in itself militates against allowing the States to prescribe a use for the goods. As the product concerned is imported under GATT conditions, it must, in fiscal terms, be subject to the same treatment as the domestic product; to lay down a compulsory use for it would be the same as subjecting it, albeit indirectly, to special treatment. As the EEC is itself bound by the GATT agreements, it cannot force or empower Member States to prescribe a use for frozen beef and veal which forms part of the GATT quota.
5. From the answer it gave on 26 May 1971 to written Parliamentary Question No 15/71 (OJ C 59, p. 6), is clear that the Commission interprets Article 2 (2) of Regulation No 2557/70 of the Council of 15 December 1970 on the opening, apportionment and method of administration of the Community tariff quota for frozen beef and veal coming under CCT No ex 02.01 A II (a) (OJ L 275, p. 9) as requiring the Member States to guarantee freedom of access to the share of the quota assigned to them for anyone (established in their territory) who presents or has presented for Customs clearance frozen beef or veal intended for consumption on their territory. The same interpretation must be placed on Regulation No 92/68 and Regulation No 110/69. It is clearly confirmed by Article 3 of Regulation No 186/73 of the Council of 23 January 1973 on the opening, apportionment and method of administration of a Community tariff quota for frozen beef and veal falling within subheading 02.01 A II (a) 2 of the Common Customs Tariff (1973), (OJ L 25, p. 21), which provides that the Member States shall take all appropriate steps to guarantee to importers established in their countries free access to the quota-part allotted to them.
6. The outcome of these considerations is that the Community could not and did not intend to impose any condition on access to quotas of frozen meat assigned to Member States. Article 3 of Regulation No 92/68 and Article 2 of Regulation No 110/69 must, therefore, be interpreted to mean that the Community has granted the Member States power to allocate their share of the frozen beef and veal quota under GATT among persons who have made appropriate application, to the exclusion of any possibility whatever that this power includes authority to prescribe the use to which the meat must be put. The answer to the first question is therefore in the negative.
1. In these circumstances, the Member States have no power to add a condition concerning the use to which the goods may be put. The effect of decisions of this Court, particularly the judgment of 18 February 1970 in Case 40/69 (Hauptzollamt Hamburg-Oberelbe v Firma Paul G. Bollman, reference for a preliminary ruling from the Bundesfinanzhof, Rec. 1970, p. 80) is that, in the absence of provision to the contrary, the Member States may not, in order to ensure implementation of Community law, adopt measures designed to modify their effect; still less may they be recognized as having the power to do so for purposes of their own which are foreign to those being pursued by Community law.
2. The Regulations of the Council to which the question of interpretation refers contains no provision opposed to this principle.
3. Further evidence that management does not confer authority to prescribe the use for the product covered by the quota is contained in Article 5 of the Council Decision of 13 October 1964 on the additional tariff quota of frozen beef and veal referred to in Article 4 of Regulation 14/64 (OJ p. 2584). Article 1 of this decision makes eligibility for the additional quota expressly conditional on its use for processing; although, clearly, the Member States have therefore no power to use the goods for a different purpose, Article 5 of the decision is, in essence, the same as Article 3 of Regulation No 92/68 since it provides that the quotas shall be managed by each Member State in accordance with its own administrative provisions.
4. The reference to the administrative provisions of the Member States in Article 3 of Regulation No 92/68 and Article 2 of Regulation No 110/69 cannot be interpreted to mean that the extent of the powers conferred on the Member States varies according to the law of each nation concerned. It follows from the Judgment of the Court of 11 February 1971 in Case 39/70 (Norddeutsches Vieh- und Fleischkontor GmbH v Hauptzollamt Hamburg-St. Annen, reference for a preliminary ruling made by the Finanzgericht Hamburg, Rec. 1971, p. 58) that the uniform application of Community provisions allows no recourse to national rules except to the extent necessary to carry out the Regulations. An express reference to internal provisions must therefore be regarded as purely declaratory; it cannot affect the necessarily uniform interpretation of Community law.
5. An interpretation which widens the powers of the Member States in relation to the handling of Community quotas would be incompatible with the principle of non-discrimination between Comunity operators, particularly between operators of different Member States. This principle, embodied in Article 3 and the second paragraph of Article 40 (3) of the Treaty, assumes special importance in the context of Community quotas: in this field, the fact that the quota is limited gives special emphasis to the need for it to be allocated on a uniform basis throughout the Community, and every effort must be made to avoid increasing, as a result of wider interpretations, the danger, inherent in a system of national control over Community quotas, of discrimination between operators of different Member States.
6. The rules of the common organization of the market in beef and veal, as laid down in Regulation No 14/64 and later, with effect from 29 July 1968, in Regulation No 805/68, provide the essential guidelines for interpretation of the provisions involved in the present case.
7. The opening of an annual Community quota of 22000 metric tons of frozen beef and veal at 20 % duty represents an obligation for which the Community contracted under GATT. Adoption by the Community or by a Member State of provisions prescribing the use to which it must be put would not in itself constitute a failure to fulfil obligations under GATT; on the other hand, it would be a breach of those obligations if the annual quota could not be fully taken up because a compulsory use had been imposed.
8. Under the common market organization in beef and veal, the Community itself had to resolve the problem of frozen meat intended for processing, but the Community did not feel able to make use of the GATT quota. Article 4 of Regulation No 14/64, referring to the possibility of fixing a frozen meat quota, specified that this was additional to the GATT quota; under the more detailed organization of the market set out in Regulation No 805/68, special arrangements laid down in Article 14 for frozen meat intended for processing exist side by side with the annual opening of the GATT quota under Article 16 of the Regulation. The Community did not feel that it ought to prescribe a specific use for meat imported under the GATT quota; nor, therefore, could it, in the same breath, leave the Member States free to do so.
9. Furthermore, to earmark the GATT quota for direct consumption could have had a despressing effect on fresh meat prices. The Community rules constitute a self-contained system whose integrity must be a basic consideration in any interpretation: this integrity would disappear if the Member States were recognized as having authority to pursue an objective diametrically opposed to that of the common market organization.
10. Finally, as we are concerned with an agricultural product subject to a common market organization, it must be accepted that the Member States have no power whatever to make eligibility for a share of the GATT quota conditional on its being used for a particular purpose.
B —. On the second question
1. By order of 13 April 1973, received at the Registry on 30 April 1973, the Tribunale Penale of Trent referred to the Court, under Article 177 of the EEC Treaty, two questions of interpretation concerning Regulation No 92/68 of the Council of 23 January 1968 on the Community tariff quota of 22000 metric tons of frozen beef and veal, bound at 20 % under the General Agreement on Tariffs and Trade (GATT) (OJ L 23, p. 2) and Regulation No 110/69 of the Council of 16 January 1969 on the same subject (OJ L 18, p. 1).
2. In Regulation No 92/68, the Council carried out the apportionment of the quota between the Member States for the year 1968, allocating a quota share of 15000 metric tons to Italy.
3. The first question asks whether, under the provisions of Article 3 of Regulation No 92/68 and Article 2 of Regulation No 110/69, taken together, the Member States can, in regard to the consignments allotted to them in the share-out of the two quotas, adopt provisions designed to control their use.
4. The quota involved was negotiated by the Community on the basis of the powers conferred on it by the Treaty in matters of tariff and commercial policy.
5. As certain conditions need to be laid down in regard to allocation, as an integral part of the methods by which quotas are managed, the variation in wording cannot be read as an intention substantially to modify the rules applicable in 1968 for management of the 1969 quota.
6. Under the Community system of tariff quotas, the institutions of the Community — Council and Commission — have power to determine the economic use to which these quotas are to be put and, consequently, to decide the way in which they are to be administered.
7. Against this background only the Institutions have the right to prescribe a use for the quota.
8. Any provision by a Member States allocating a Community quota on conditions it had decided for itself would run the risk of compromising the objectives of the Community's economic policy as well as equality of treatment for all within its jurisdiction.
9. As soon, however, as a Member State introduces conditions regarding use in pursuit of objectives of economic policy which are not the subject of provisions adopted by the Community, these administrative powers are exceeded.
10. As the second questions was conditional on the first being answered in the affirmative, there is no need to answer it.
11. The costs incurred by the Government of the Italian Republic and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable and, as these proceedings are a step in criminal proceedings before the Tribunale Penale of Trent, 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 the defendants in the main action, the Government of the Italian Republic 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 Regulation No 92/68 of 23 January 1968 on the Community tariff quota of 22000 metric tons of frozen beef and veal, coming under Common Customs Tariff No ex 02.01 A II and Regulation No 110/69 of the Council of 16 January 1969 on the opening, apportionment and method of administration of a Community tariff quota for frozen beef and veal falling within subheading 02.01 A II (a) 2 of the Common Customs Tariff; 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 Tribunale of Trent by order of that court dated 13 April 1973, hereby rules: