Report for the Hearing in Case C-367/88

I — Facts

1. Legislation

1.1. Community legislation

Council Directive 69/169/EEC of 28 May 1969 on the harmonization of provisions laid down by law, regulation or administrative action relating to exemption from turnover tax and excise duty on imports in international travel (Official Journal, English Special Edition 1969 (1), p. 232) was subsequently amended and extended by a series of further directives, most recently by Council Directive 89/220/EEC of 7 March 1989 (Official Journal 1989 L 92, p. 15). Article 2(1) of the directive, as amended by Council Directive 88/664/EEC of 21 December 1988 (Official Journal 1988 L 382, p. 41), provides for the possibility of applying exemption from turnover tax and excise duty on imports, as regards travel between Member States, to goods in travellers' personal luggage which fulfil the conditions laid down in Articles 9 and 10 of the Treaty, if such imports have no commercial character and the total value of the goods does not exceed ECU 390 per person. For travellers under 15 years old, the exemption is reduced to ECU 100 (Article 2(2)).

For the purposes of the application of the directive, Article 3(2) provides as follows: importations shall be regarded as having no commercial character if they: (a) take place occasionally, and (b) consist exclusively of goods for the personal or family use of travellers, or of goods intended as presents; the nature or quantity of such goods must not be such as might indicate that they are being imported for commercial reasons. Paragraph 3 of Article 3 (inserted by the fourth Council Directive 78/1033/EEC of 19 December 1978, Official Journal 1978 L 366, p. 31) defines the concept of personal luggage.

Article 4 of the directive sets quantitative limits for certain categories of goods, in particular tobacco products, alcoholic beverages, perfumes, coffee and tea. Alcoholic beverages may be imported duty free only in limited quantities (not exceeding 1.5, three and five litres, according to the type of alcoholic beverage). Beer is not subject to such limits.

Subject to the quantitative limits laid down by the aforesaid provision and having regard to the restrictions concerning travellers under 15 years old, the value of the goods listed is not taken into consideration for the determination of the exemption referred to in Articles 1 and 2.

Since its accession to the Community, Ireland has been accorded certain derogations from the provisions of Directive 69/169 and it is still granted a limitation of ECU 85 for the unit value of goods which travellers are allowed to bring into Irish territory as part of their luggage (Directive 88/664, cited above).

1.2 National legislation

By administrative action in November 1984 Ireland restricted the travellers' allowance for beer imported across the land frontier to a maximum of 12 litres (or 21 pints) per person.

Imports exceeding that quantity are regarded as being of a commercial character and therefore subject to tax.

2. Background to the dispute

By letter of 27 December 1984 to the Irish authorities, the Commission requested urgent reconsideration of the contested administrative measure.

By letters of 5 March 1985 and 16 July 1985, the Irish Government put forward arguments which failed to sway the Commission.

On 3 April 1986 the Commission requested the Irish Government, pursuant to Article 169 of the EEC Treaty, to submit its observations to it within a period of two months regarding the incompatibility of the tax system established by the administrative measure in question with the provisions of Directive 69/169.

By letter of 30 June 1986, the Irish Government informed the Commission that it was not prepared to abolish the 12-litre rule. No new arguments were adduced by Ireland in support of its position.

On 29 October 1987, the Commission issued a reasoned opinion pursuant to the first paragraph of Article 169 of the EEC Treaty. It pointed out that the Irish Government had failed to fulfil its obligations under the EEC Treaty by not complying with the aforesaid directive and requested it to comply with the terms of its opinion within two months.

By letter of 23 September 1987, Ireland asked for a two-month extension of the period for reply to the reasoned opinion.

In its definitive reply of 18 November 1987, Ireland maintained its position unchanged.

II — Written procedure and conclusions of the parties

The Commission's application was lodged at the Court Registry on 10 December 1988.

The written procedure followed the usual course. On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

The Commission, the applicant, claims that the Court should:

The Irish Government, the defendant, contends that the Court should:

III — Submissions and arguments of the parties

The Commission claims that the contested measure is contrary to the directive.

In its view, it follows from the case-law of the Court (judgments in Case 158/80 Rewe v Hauptzollamt Kiel (Rewe I) [1981] ECR 1805 and in Case 278/82 Rewe v Hauptzollämter Flensburg, Itzehoe and Lübeck-West [1984] ECR 721) that the Community rules are exhaustive in the matter and that the Member States retain only the restricted power given to them by the provisions of the directive.

The Commission considers that beer is not among the goods listed in Article 4(1) of the directive, which lays down maximum quantitative limits for certain products. In order to qualify for the exemption referred to in Articles 1 and 2, the beer must be contained in travellers' personal luggage, it must fulfil the conditions laid down in Articles 9 and 10 of the Treaty, it must have been acquired subject to the general rules governing taxation on the domestic market of one of the Member States, it must be an import having no commercial character and its total value must not exceed ECU 390 per person.

According to the Commission, the 12-litre restriction is also arbitrary. It automatically raises a presumption that the importation is for commercial purposes once the quantity of beer imported exceeds 12 litres, even in the case of occasional imports intended for the personal or family use of travellers or as presents. The existence of a commercial purpose of that kind must be assessed case by case, having regard to the provisions of Article 3(2) of the directive.

In the Commission's view, the Irish Government's argument in favour of interpreting the directive in a manner that would make it possible for Member States to apply a quantitative restriction of 10 to 13 litres for beer, inasmuch as that would represent the equivalent in alcoholic volume of that contained in the quantity of alcoholic beverages which under Article 4(1) travellers are authorized to import as part of their luggage subject to quantitative limitations, is not relevant since beer cannot be subjected to any quantitative restriction.

Finally, the Commission points out that the purpose of the directive is to set up a single market and that it would have run counter to that aim if it had suggested the introduction of fresh quantitative restrictions which would only have partitioned the market to an even greater extent when the latter must, as is apparent from the fifth recital in the preamble to Directive 72/230/EEC of 12 June 1972, modifying Directive 69/169/EEC, gradually develop into an internal market.

The Irish Government considers that the failure to include beer amongst the alcoholic beverages referred to in Article 4 of the directive, whose importation is subject to specific quantitative limits for exemption, is an inconsistent and illogical omission. The Commission itself considers that alcoholic beverages similar to those listed in Article 4 of the directive must be subjected to quantitative restrictions. That is why it made a proposal to the Council, which the Council accepted, to include in that provision tafia, saké and other similar beverages with an alcoholic strength not exceeding 22% vol. (Article 1 of Council Directive 85/348/EEC of 8 July 1985, Official Journal 1985 L 183, p. 24).

According to the Irish Government, the equivalent in alcoholic volume of the beverages referred to in Article 4(1)(b) of the directive is a volume of 10 to 13 litres of beer (13.3, 10 and 13.3 litres in beer terms for spirits, fortified wines and the like, and wine, respectively). The contested measure is therefore in keeping with the spirit of the quantitative restrictions laid down by the directive.

According to the Irish Government, the presumption that an importation is for commercial purposes must arise from specific quantitative limits since the case-by-case approach advocated by the Commission is subjective, lacks objectivity and transparency and is contrary to the principle of legal certainty.

The Irish Government also contends that the absence of a limit would lead to abuses, as was the case before November 1984, when the exemption on quantities of beer of up to 120 litres per car was being claimed by persons returning from Northern Ireland who had imported it not for personal consumption but for resale. Beer imported into Ireland in travellers' luggage had been detected on retail sale in the State.

1 Language of the case: English.