Opinion of Mr Advocate General Reischl

Mr President,

Members of the Court,

My opinion today concerns yet another case on the German Spirits Monopoly and the related provisions on imports in force at the beginning of 1976. I do not need at this point to give an account of the details thereof as the Court is undoubtedly familiar with them from a series of earlier cases. I shall return to them later in so far as it is necessary to do so for a decision in this case.

In January 1976 the respondent in the main proceedings applied for customs clearance of blended spirits from Belgium consisting of 90% ethyl alcohol of agricultural origin and 10% spirit derived from wine for storage in its own spirits warehouse. The Hauptzollamt [Principal Customs Office] levied a duty amounting to DM 80 per hectolitre of ethyl alcohol, which was referred to as the Monopolausgleichspitze [margin contained in the monopoly equalization duty] and was calculated by deducting the tax on spirits (at the time DM 1500) from the difference between the normal selling price of the monopoly spirit (at the time DM 1833) and the basic price of the spirit, that is to say the monopoly's representative buying price (at the time DM 253).

The objection lodged against that assessment was rejected. However, the importer successfully brought an action before the Finanzgericht [Finance Court] Hamburg, which took the view that the imposition of a duty equal to the Monopolausgleichspitze was incompatible with Article 95 of the EEC Treaty. The court effected separate comparative calculations for the constituent parts of the products, namely ethyl alcohol of agricultural origin and spirit derived from wine. The former, in so far as it was domestically produced, had to be sold to the monopoly under Anicie 58 of the Law on the Spirits Monopoly [Branntweinmonopolgesetz] in the version of January 1976 and, if intended for the spirits industry, could be obtained only at the monopoly's normal selling price. Spirits derived from wine, on the other hand, like other types of spirit produced from certain raw materials or by certain distilleries, did not have to be sold to the monopoly but were subject to the so-called Branntweinaufschlag [surcharge on spirits]. That charge wa calculated, on a production of 60 hectolitres or more, essentially from the difference between the selling price of the spirit and its basic price reduced by an average amount in respect of the administrative costs which the monopoly saved by not acquiring the spirit, which at the relevant time was fixed by order at DM 31.

The Finanzgericht took the view that in the case of ethyl alcohol of agricultural origin only the tax on spirits amounting at that time to DM 1500 contained in the selling price could be regarded as comparable internal taxation. It considered that other elements of the purchase price, and in particular the fixed amount of DM 80 included to cover the monopoly's administrative costs, had to be disregarded because the selling price of the spirit, although fixed by administrative act, constituted a claim governed by private law and therefore could not have the standing of a fiscal claim comparable to an excise duty. Consequently, imported ethyl alcohol of agricultural origin was taxed more highly by DM 80, the amount of the Monopolausgleichspitze.

With regard to spirit derived from wine, which if domestically produced is subject to the Branntweinaufschlag, the Finanzgericht considered decisive the fact that according to the case-law of this Court it is not permissible to tax imported products to a higher fixed rate amount than is borne, even if only in certain cases, by similar domestic products by reason of graduated taxation. However, in view of the fact that at the relevant time the Branntweinaufschlag on spirit derived from wine produced by Stoffbesitzer [owners of raw materials] within the production limit of four hectolitres of ethyl alcohol came to only DM 1301 per hectolitre, on importation that product constituent was also taxed more highly than the similar domestic product by at least DM 80.

The Hauptzollamt appealed to the Bundesfinanzhof [Federal Finance Court] against the judgment of the Finanzgericht. The appeal court takes the view that for the purpose of comparing the tax charges it is immaterial that spirits are taxed through the monopoly by means of civil law transactions. Far more significant is the fact that the Spirits Monopoly is administered as an instrument of government by a fiscal authority and that by means of the normal selling price, an amount determined by the authority of the Finance Minister, it raises revenue for the Federal Treasury in the form of the tax on spirits and income for financing the monopoly. The latter can be determined only in a very general way by working on the basic price as the monopoly's representative acquisition price. However, since the Monopolausgleichspitze can also be calculated by using the formula: normal selling price minus basic price of the spirit minus tax on spirits, there can be no infringement of Article 95 in the case of the constituent product ethyl alcohol of agricultural origin. With regard to the constituent product spirit derived from wine, it must be conceded that if the lowest possible rate for domestic distilleries is applied, the equivalent domestic product must bear a surcharge margin amounting not to DM 80 but only to DM 16.05, which necessitates a corresponding correction to the assessment of the tax liability in respect of the imported product. However, the Bundesfinanzhof considers that at the last-mentioned rate the Monopolausgleichspitze is certainly not discriminatory since it is not possible to assume an even lower rate of surcharge, first because spirit derived from wine, which comes from Abfindungsbrennereien [distilleries for which production is estimated at a standard level for tax purposes on the basis of the amount of raw materials used]. Stoffbesitzer and Obstgemeinschaftsbrennereien [bonded distilleries, operated by cooperatives and producing spirit exclusively from fruit grown by the members of the cooperative], is not on the market and, secondly, because it cannot be accepted that the imported product has been produced by comparable foreign Kleinbrenner [small distillers] or Kleinbrennereigemeinschaften [small distiller's cooperatives].

By order of 2 December 1980 the Bundesfinanzhof stayed the proceedings and referred the following questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty:

My opinion on that question is as follows:

1. As is clear from the wording of the question raised and from the grounds of the judgment making the reference, the Bundesfinanzhof considers separately the two constituent parts of the imported blended spirit (ethyl alcohol of agricultural origin and spirit derived from wine) and takes the view that the only question on which an interpretation is required is whether ethyl alcohol of agricultural origin, which at the relevant time could be obtained in the Federal Republic of Germany only through the monopoly, was subject to a tax levied by an authority equal at least to the Monopolausgleichspitze. On the other hand, the Bundesfinanzhof considers that no particular problems arise in relation to the constituent product spirit derived from wine, which if domestically produced is exempt from the obligation to sell to the monopoly and is therefore subject to a special form of tax, namely the Branntweinaufschlag. The relevant law has already been expounded in the case-law of the Court, which makes a question of interpretation unnecessary.

2. The first part of the question — whether the expression taxation imposed on a ... domestic product covers a charge arising from the selling price fixed by the administration of the Spirits Monopoly — does not raise any particular difficulties because at that stage it draws no distinction between the individual elements of the selling price.

3. The second part of the question, however, which clearly deals with the real point at issue in this case, presents considerably greater difficulties. It asks whether, besides the tax, that part of the selling price fixed by the monopoly which serves to cover the costs of the monopoly administration also constitutes taxation. The element in question is the amount of DM 80 which is mentioned at the beginning of this opinion and is sometimes referred to as the Preisspitze [price margin].

4. At this stage, however, before coming to any final conclusions, I must consider a point which is made in the grounds of the order for reference and is also thought to be appropriate by the Commission, namely whether it is not legitimate simply to deduct from the Preisspitze, that is to say from the monopoly's administrative costs, the amount which is also left out of account in calculating the so-called Branntweinaufschlag in connection with the taxation of domestic spirit exempt from the requirement to sell to the monopoly. That would mean that since the Branntweinaufschlag is reduced by administrative costs saved by the monopoly amounting to DM 31, the imposition of the Monopolausgleichspitze would have been permissible, in any event át a rate of DM 49 (DM 80 minus DM 31).

5. For all those reasons I propose that the question raised by the Bundesfinanzhof should be answered as follows :

1 Translated from the German.