JUDGMENT OF 16. 12. 1963 — JOINED CASES 2 TO 10/63 SAN MICHELE v HIGH AUTHORITY

In Joined Cases 2/63 to 10/63

THE COURT composed of: A. M. Dormer, President, Ch. L. Hammes and A. Trabucchi (Presidents of Chambers), L. Delvaux, R. Rossi (Rapporteur), R. Lecourt and W. Strauß, Judges, Advocate-General: K. Roemer Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts

The facts may be summarized as follows:

By Decisions of 23 February 1962, the High Authority had ordered the applicant undertakings in the present cases to provide it with their invoices for electric current used in the period from 1 April 1954 to 30 November 1958. The transmission of this information under Article 47 of the Treaty was intended to enable the High Authority to check the particulars required for the purposes of the equalization of imported ferrous scrap.

These Decisions were the subject or an application brought by each of the parties to whom they were addressed. The applicants pleaded the illegal nature of the request addressed to them and in the course of the oral procedure claimed that the transmission of the said invoices might not be possible because under Italian law invoices only have to be retained for five years.

The Court decided on these applications by its judgment of 14 December 1962 in which, inter alia, it:

accepted the principle that the High Authority is authorized to require the production of all such documents as, for example, electricity invoices under the power conferred on it by Article 47 of the Treaty;

left it to the High Authority to determine whether in the present cases the failure to produce certain invoices was justified having regard to the law applicable, and to come to its own conclusion on the basis thereof.

Following this judgment the High Authority on 18 December 1962 adopted new Decisions which were notified to the applicants on 24 December 1962. By these Decisions the High Authority drew attention to the operative part of the Decisions of 23 February 1962, accepted as legal by the Court, and imposed pecuniary sanctions on the applicants under Article 47 of the Treaty.

It thereby imposed on them:

a fine of 0.5 % of their annual turnover;

a periodic penalty payment of 2.5 % (5 % in the case of the applicant in Case 3/63) of the daily turnover for each day's delay in the transmission of the invoices or copies thereof with effect from the date of notification of the Decision.

The Decisions are the subject of the present applications lodged at the Court Registry on 28 January 1963.

II — Conclusions of the parties

The applicants claim that the Court should :

primarily

annul the contested Decision and order the High Authority to make a full and proper re-examination of the question whether the failure to produce the electricity invoices was justified having regard to the law applicable;

secondarily

annul the periodic penalty payment and order a reduction of the fine to the following extent:

a) four-fifths in Cases 2, 3 and 6/63;

b) five-sixths in Cases 4, 7, 8, 9 and 10/63:

c) nine tenths in Case 5/63;

and in addition order the defendant to bear the costs of the proceedings.

The defendant contends that the Court should:

dismiss all the conclusions in the applications as inadmissible or unfounded;

order the applicants to bear the costs.

III — Submissions and arguments of the parties

The submissions and arguments of the parties may be summarized as follows:

Admissibility

The defendant maintains that the applications are inadmissible because:

they submit to the Court questions which it has already decided in its judgment of 14 December 1962;

the applications do not indicate, even briefly, the grounds on which they are made;

the applications were made under Article 33 of the Treaty but the secondary conclusions should be founded on Article 36.

The applicant contests the validity or these objections and raises the following points:

The applications are in fact made against the Decisions of 18 December 1962. The issues of fact and of law on which the Court gave its judgment of 14 December 1962 differ from those on which the present applications are based. These applications differ, both as regards the petitum and causa petendi, from those made against the Decisions of 23 February 1962 and therefore cannot be confronted with the argument that the said judgment operates against them with the force of res judicata. Nor can this judgment affect questions (fines and periodic penalty payments) which had not arisen and were unknown to the applicants. Moreover whilst it is true that in the previous cases the applicants have already claimed that Italian law only requires them to retain business invoices for five years, it cannot be denied either that the Court gave no decision on this point since it left the High Authority to determine, on its own responsibility, whether failure to produce the invoices at issue was justified, having regard to the law applicable, and to come to its own conclusion on the basis thereof.

The indication or the grounds or the applications is implicit therein. From the arguments developed it is clear: Moreover the fact that the High Authority has been able to prepare its defence proves that the grounds of the applications were sufficiently indicated.

a) that the Decisions addressed to the applicants in Cases 2, 3, 5 and 6/63 infringe Articles 14 and 15 of the Treaty in requiring the production of electricity invoices covering a period longer than that during which the applicants have been engaged in the iron and steel industry;

b) all the contested Decisions are vitiated by misuse of powers in that the High Authority:

has not correctly assessed the facts;

sets time limits, unjustified by the law applicable, for the performance of the applicants' duty to produce the invoices at issue;

imposes pecuniary sanctions, whereas in the present cases it should have calculated the quantities of ferrous scrap used by a process of deduction;

imposes these sanctions even when the applicants cannot be held responsible for the inability of the electricity supply companies to provide copies of the invoices in question;

has discriminated against the applicants vis-a-vis the applicant in Case 18/62 who is in a similar position to them.

It is clear from the conclusions in the secondary submission that the applications are founded on Article 36 of the Treaty in conjunction with Article 33. Moreover as the Court accepted in the Joined Cases 7/56 and 3 to 7/57, an applicant is not obliged to specify the Articles invoked in support of his application; it is enough that the facts, submissions and conclusions are contained therein.

The defendant replies as follows:

The Decisions at issue are legally based on those of 23 February 1962, accepted by the Court as legal in its judgment of 14 December 1962. Moreover the submissions and arguments invoked in the present applications are the same as those put forward in the applications against the Decisions of 23 February 1962. Thus the applicants have already made the point that it was in fact impossible for them to produce the electricity invoices at issue, stressing that failure to forward them was justified having regard to the relevant Italian law. The Court however accepted in the said judgment that such an objection did not affect the validity of the contested Decisions and thus has already ruled on this same issue which the applicants are raising afresh in the present applications. Moreover although it is correct that in this judgment the Court left it to the High Authority to assess the applicants' responsibility in the circumstances, it is equally true that this assessment was already contained in the Decisions of 23 February 1962. The submission of this question for examination by the Court by means of the present applications is a violation of the principle of res judicata. Finally a perusal of pages 38 et seq. of the reply is enough to convince one that the present applications are in fact made against the Decisions of 23 February 1962.

The grounds of the application are in fact brought out only in the reply, since it is quite impossible to find them in the original applications. Indeed, following the decisions of the Court in Joined Cases 19 and 21/60 and 2 and 3/61, the application must specify the grounds on which it is based. This is an essential requirement which cannot be disregarded particularly in the present case where the applications do no more than invoke in a general and vague way the grounds on which they are based, and scarcely indicate which of the grounds provided for in the Treaty is the one actually put forward. Finally the fact that the High Authority has nevertheless been in a position to prepare its defence does not alter the fact that an element essential to the admissibility of the applications is missing in the present case.

The omission or any reference to Article 36 of the Treaty and of any argument as to the applicability of this Article in the present case results in the secondary conclusions appearing ambiguous and contradictory. Further, even the definition of the subject of each action set out at the beginning of the application explicitly shows that the action is founded on Article 33 of the Treaty. The reference to the judgment of the Court in Joined Cases 7/56 and 3 to 7/57 is irrelevant in the present case because in those cases the applicants, whilst not explicitly invoking Article 40 of the Treaty on which their action was based, showed that that provision had been infringed by the Common Assembly.

On the substance of the cast

A — As to the principal conclusions

1. In Cases 2, 3, 5 and 6/63

The applicants state that since the period during which they have been engaged in the iron and steel industry covers a limited period in comparison with that of the equalization scheme (1 April 1954 to 30 November 1958) the contested Decisions are illegal in that they require production of invoices for electricity consumed during the whole period of the equalization scheme and impose pecuniary sanctions for infringement of this obligation. The explanation provided by the defendant on this point does not make it possible to regard the Decisions as lawful. This explanation is in fact contained in the statements of defence and thus comes three months after the sanctions at issue were applied whereas the principles of administrative law require that the reasons on which a decision is based must be contained in the decision itself, and not be given a posteriori.

The defendant rejoins first that the pecuniary sanctions in question were not fixed according to the period during which each applicant was engaged in the iron and steel industry. The Decisions at issue censure the persons to whom they are addressed solely for not having produced the documents requested by the High Authority, however long they have been engaged in the iron and steel industry during the period of the equalization scheme and thus for not having complied with the obligation set forth in the Decisions of 23 February 1962 and based on Article 47 of the Treaty. It further objects that in any event the complaint in question should have been made against the Decisions of 23 February 1962, because it is they which impose this obligation whilst the Decisions of 18 December 1962 are limited to the imposition of pecuniary sanctions for infringement of this obligation. Moreover, the defendant adds, even the opportunity provided for by the third paragraph of Article 36 is not available in the present case since on the one hand the legality of the Decisions of 23 February 1962 can no longer be questioned following the judgment of the Court of 14 December 1962 and on the other hand the legality of these Decisions is not called in issue by the Decisions of 18 December 1962 which impose pecuniary sanctions for the infringement of this obligation independently of the actual duration of the period during which the applicants were engaged in the iron and steel industry.

2. All cases

The applicants state that after undergoing several inspections by the High Authority and the Italian fiscal authorities they quite properly believed:

i) that they were thenceforward discharged from their duties towards the High Authority provided for by Article 47 of the Treaty;

ii) that the information they gave to the High Authority and the national fiscal authorities would not be further checked for its accuracy;

iii) that they were not required to keep the electricity invoices at issue any longer because this obligation had ceased by virtue of Italian law.

On these issues in particular the applicants develop a long series of legal arguments, raising the following points:

a) It is a settled legal principle that the power of fiscal authorities to correct errors or make assessments may be exercised only within the time-limits fixed by law. Under Italian law (‘testo unico’) on tax adjustment of 29 January 1958, No 645 (Articles 32 and 35) these time-limits are three and four years respectively from the year during which the taxpayer's return was made or should have been made. Article 42 of this law stipulates further that the authorities need not take into consideration accounting documents which the person concerned refuses to produce and that a declaration that he does not possess these documents amounts to a refusal to produce them. Therefore since in this case the issue was the correction of certain particulars relating to no later than 30 November 1958, the power of the High Authority to make subsequent corrections had expired under these provisions, the more so since the criteria for the imposition of taxes cannot be modified once the fiscal authorities have allowed the time-limit fixed by law to expire.

b) As regards, on the one hand, the ‘obligations’ prescribed in Article 47 of the Treaty which undertakings may not evade, these are two in number: The applicants have produced these declarations in proper form and undergone several inspections and checks in course of which they have submitted to the High Authority the originals of the invoices for electric energy issued by the supply companies. Almost eighteen months have passed sinse these inspections were made without the High Authority's having addressed any complaint to the applicants. Meanwhile the latter assumed that they could destroy accounting documents at least five years old. They so informed the High Authority and it was at this point that the High Authority asked for the invoices at issue to be sent to it. Following the judgment or the Court of 14 December 1962, the applicants asked the electricity supply companies for copies of these invoices. Two undertakings, FER. RO. and F.E.R.A.M., have already obtained these copies. As to the other undertakings, account must be taken of the delays and difficulties in the matter, especially as a result of the nationalization of the electricity industry in Italy currently being carried out; these difficulties ought to be known to the High Authority. In these circumstances the imposition of pecuniary sanctions appears wholly unjustified.

i) to declare, in accordance with the procedure laid down by the High Authority, the quantities of ferrous scrap purchased every month;

ii) to undergo the inspections and checks carried out by the High Authority to verify the correctness of these declarations.

c) As regards, on the other hand, the duty to keep the accounting documents and more especially trade invoices, there is no provision for this in the Treaty. As the Treaty is silent, reference must be made to national law, in this case the Italian law mentioned above. The references by the defendant to the commercial codes of other Member States are irrelevant because these provisions do not refer to trade invoices. The Italian law applicable in the present case is not Article 2220 of the Civil Code, because the obligation there set out is only for evidential purposes and for wholly special cases, but Article 2 of the Law of 19 June 1940, No 762, which lays down the obligation to keep accounting books and documents, trade invoices etc. for a period of five years. This is the more specific law as compared with Article 2220 of the Civil Code, derogating from the latter in accordance with the principle ‘in toto jure generi per speciem derogatur’.

d) The obligation laid down in Article 2220 is moreover not a true obligation: this provision lays down quite simply the ‘onere’ (burden) of keeping accounting documents for ten years for evidential purposes, in the sense that failure to keep them does not involve any direct sanctions but involves the loss of certain advantages to the person concerned or prevents his attaining a given objective. The person concerned is not obliged by virtue of this ‘onere’ to produce accounting documents; his refusal so to do exposes him to the dangers and difficulties inherent in the ‘official rectification’ undertaken by the administration within prescribed time-limits. On the other hand it is only the provisions of Article 26 of the Law of 19 June 1940 mentioned above, applicable to trade invoices subject to turnover tax, which lay down the ‘obligation’ to keep these for five years.

e) In these circumstances, since the High Authority refers to the provisions of Article 2220 of the Civil Code, it is difficult to see why it did not make an official rectification by all proper means, in particular by looking at certain accounting documents (day-books etc.) which are kept up to date and were available to it. Failure to keep the trade invoices at issue has not therefore prevented the High Authority from pursuing its aim. So this failure does not amount to an illegal act, the more so because it was brought about by the defendant itself which, after a considerable lapse of time, requires the production of invoices already shown to it.

f) Moreover the duty of making an official rectification in such circumstances arises also under Article 2 of Decision No 13/58 of the High Authority already applied in other cases (Case 18/62) and not in the present case, despite the fact that the position of the applicants is comparable with that of the applicant in Case 18/62. The High Authority has therefore committed a misuse of powers amounting to discrimination. Moreover this Article should have been applied in the present case since the Treaty contains no provision for keeping trade invoices and accounting documents, so that the High Authority ought in these circumstances either to have applied Italian law, by distinguishing ‘obbligo’ from ‘onere’ or to have applied Article 2 mentioned above.

g) Even assuming the applicants have committed an error in not keeping the invoices at issue, there is nevertheless good reason to conclude that this error was justified, the applicants being satisfied, on the one hand, that they need no longer keep these invoices and, on the other hand, that the power of rectification vested in the High Authority should be exercised within the same time-limits as those fixed for the Italian fiscal authorities. In no circumstances could such an error justify the severity of the pecuniary sanctions imposed. For the same reason it is impossible to accept as well-founded the defendant's argument that the applicant ought to have taken care to keep the invoices in question, particularly as the frequent checks already made showed, as the Court recognized in the judgment of 14 December mentioned above, that there were doubts as to the correctness of the information furnished by certain undertakings. This statement by the Court is to be regretted but must not prejudice the solution of the problem at issue in the present case.

Proceeding from an objection raised by the defendant, the applicants moreover seek to prove that the equalization scheme, whatever it may be called, is fiscal in character and so must be subject to the Italian fiscal laws mentioned above. Relying on numerous quotations from legal doctrine they develop several arguments to prove that this scheme fulfils the three essential conditions of a fiscal institution, namely a law providing for enforcement measures, an organization with the necessary powers, persons subject to those measures and considerations of public interest.

They thus conclude that, since the levies made by way of equalization are of the nature of direct taxes, only general provisions concerning such taxes are applicable to them and this explains why, in the present case, the applicants refer to the provisions of the Laws of 19 June 1940 and 29 January 1958.

The defendant replies with the following points:

The High Authority, in accordance with the judgment of the Court of 14 December 1962, has assessed the factual position on which the present applications are based, treating the failure to produce the invoices at issue as unjustified under the law applicable. This assessment is contained in the Decisions of 23 February 1962 and the applicants are therefore wrong in raising, in the applications made against the Decisions of 18 December 1962, the question whether the former Decisions were well-founded.

Starting from the principle, several times confirmed by the Court and accepted by the applicants, whereby the Community must base its actions on Community law and take account of the general principles of internal law where Community law is lacking, the High Authority in the present case has taken the view:

a) That the duty to keep accounting documents for ten years constitutes a general principle laid down not only in the Italian Civil Code but also by the commercial codes of other Member States. It is correct that the various national laws do not provide for keeping the same accounting documents, but it is also true that, whatever may be the documents contemplated, each national law fixes the same time-limits in matters of this kind;

b) That in imposing such a duty on the applicants the High Authority did not place them under a more onerous duty than that laid down in Articles 2214 and 2220 of the Italian Civil Code.

The High Authority has taken the view that these provisions of the Italian Civil Code fix a wholly ‘reasonable’ limit for its action and that the proceedings instituted by the applicants could therefore only possibly have been justified if the Decisions of 23 February 1962 and the contested Decisions envisaged only the imposition and the enforcement by way of sanctions of the obligation to produce accounting documents which the applicants were not required to keep or were not required to keep as regards the period for which they had been requested. However, this is not so in the present case. Moreover the applicants in invoking the requirement of the five years' period of limitation overlook the fact that hitherto the equalization scheme has entailed provisional rates and it may be asked whether the provisional character of this financial arrangement is not such as to interrupt the running of any prescribed period of limitation in this matter.

The discussion on the differences between ‘onere’ and ‘obbligo’ is irrelevant in the present case, the more so since not only the legislature and judicial decisions but also legal theory frequently speak of the ‘obligation’ to keep accounting documents. Moreover the High Authority has used language which even the applicants themselves use in their applications. In any event there must be no confusion — as there is on the part of the applicants — between the ‘obbligo’ to produce accounting documents and the ‘obbligo’ (or ‘onere’) to keep them. The first arises from the Decisions of 23 February 1962, while the second is based on the provisions of the Italian Civil Code mentioned above. The fact that the Italian legislature did not provide a special penalty for cases in which this latter obligation is not observed certainly does not show, as the applicants claim, that traders are not required to keep acounting documents; it simply shows that the legislature left it to certain authorities to give concrete form to this duty and, if need be, provide the necessary sanctions to enforce it. These authorities must be deemed to include, apart from the organs of the State, the High Authority by virtue of the adaptation of Italian law to the provisions of the ECSC Treaty.

As to the obligations (‘obblighi’) arising, as regards the applicants, from the application of the equalization scheme, it is incorrect that these are two in number and that the applicants have observed them. First it must be noted that the Treaty provides many more obligations in this matter, in particular those arising under Article 47 and having their legal basis in the judgment of the Court of 14 December 1962. Secondly it must be emphasized that by their conduct the applicants have hampered the proper working of the equalization scheme and moreover that the frequency of the checks to which they were subjected clearly showed, as the Court recognized in that judgment, that there were serious doubts about the truth of declarations made by certain undertakings as to the quantities of ferrous scrap used.

The applicants moreover accuse the High Authority of not having carried out an official rectification and having on the contrary imposed pecuniary sanctions. But it is to be remembered that the action of the High Authority is directed precisely to checking by a process of deduction the quantities of ferrous scrap used by the applicants; this clearly has nothing to do with the sanctions at issue which charge the applicants with infringement of the obligation contained in the Decisions of 23 February 1962. In imposing these sanctions the High Authority has proceeded on the basis of Article 2220 of the Civil Code because this seemed to it to be the only one compatible with the system of Article 47 of the Treaty. Moreover it must not be forgotten that, on the one hand, in Community law the estimated assessment provided for in Article 2 of Decision No 13/58 does not preclude the application of Decisions Nos 19 and 20/60 by virtue of which the basis of assessment to contribution is fixed according to the notifications made by each undertaking in question and the special notifications of group scrap asked for and obtained under Article 47; and that on the other hand for cases of this kind several Italian fiscal laws make provision not only for an estimated assessment but also for sanctions under civil and criminal law.

After drawing attention to a whole series of statements contained in the applications and in the reply which in its view manifestly contradict each other, the defendant opposes the view that the fiscal provisions invoked by the applicants derogate from the provisions of the Italian Civil Code. On this subject it argues as follows:

Articles 51 and 35 or the Law of 29 January 1958 on direct taxes (and not on tax adjustment) have the sole aim of subjecting to a period of limitation the fiscal authorities' power to make or correct assessments of income; (according to the incorrect quotation by the applicants it is a matter of power to correct ‘particulars’ already established); they do not derogate from the obligation to keep the accounting documents rereferred to in Articles 2214 and 2220 of the Civil Code. As regards this last obligation, a distinction must be made between two wholly different problems: on the one hand that of ascertaining within what period of time the authorities can make or correct assessments of income and on the other hand that of the duty of keeping accounting documents, in particular where traders are concerned. It is in fact normal and proper that the authorities, whilst observing the time-limits laid down for making assessments of income or correcting them, should make inspections and checks relating even to an earlier period of the business activities of taxpayers. Moreover it is sufficient to examine other Articles of this Law (Articles 42, 43 and 44) to establish that it often refers back to the Italian Civil Code and does not therefore derogate from Articles 2214 and 2220 thereof.

The Law of 19 June 1940 is earlier than the Civil Code and in these circumstances it might rather be asked whether it is not the Code itself which should take precedence over Article 26 of this Law. Moreover a reading of the text of this provision in its entirety shows on the one hand that it is addressed to a very large class of persons consisting not only of persons in the category of traders or industrialists within the meaning of the Law and on the other hand that it refers solely to accounting documents which must be kept and produced for the purposes of collection of turnover tax.

The defendant also makes known its attitude to the question whether the equalization scheme is fiscal in character. It devotes several pages of its pleadings to refuting the argument of the applicants, and refers not only to the general principles of tax law but also to the decisions of the Court, especially in Joined Cases 17 and 20/61 and in Case 19/61. It also quotes the decisions of the Italian Corte di Cassazione to show that the purposes of the equalization levy are not the same as those which the Corte di Cassazione attributes to levies of a fiscal character. Having said that, the defendant states that Article 2220 of the Civil Code does not apply only to fiscal matters. In this connection it refers to several provisions of this Code, which accept the evidential value of accounting documents, and Article 116 of the Code of Civil Procedure regarding unjustified refusal to produce documents asked for.

In any event, the defendant adds, even if the equalization scheme be of a fiscal nature, it must not be overlooked that:

i) the equalization levy is not comparable with a direct tax and therefore it is impossible to see why in this matter the High Authority should observe the time-limits fixed by the law of 29 January 1958 in regard to direct taxes;

ii) the time-limits fixed by this Law concern only the Italian fiscal authorities, and the Community could be bound by Italian law only to the extent that the Treaty so provides. It is in fact the national law of the Member States which must be adapted to the Treaties consequent upon their ratification, not vice versa.

As regards the complaint of discrimination, the defendant finally states that the position of the applicant in Case 18/62 and of the applicants in the present proceedings are not comparable because in the first case the High Authority had already taken account of the amounts of electricity consumed by the applicant and it was precisely because of the disputes on this issue that the Court of its own motion ordered the production of electricity invoices. The decision of the Court, it concludes, indirectly confirms that the obligation imposed on the applicants by the High Authority to produce to it the invoices at issue is well-founded.

B — The subsidiary conclusions

The applicants rely first on the illegality of the Decisions at issue, which in their view flows from the considerations developed above, observing that Article 10 of the Law of 5 January 1956, No 1, on tax adjustment provides that where trade invoices are not produced or where production thereof is refused, the administration shall make an assessment by the deductive method provided that the invoices have been asked for within the time-limits prescribed by law, this assessment being deemed a sufficient sanction.

They stress moreover that pecuniary sanctions cannot be imposed on them because the electricity supply companies might well find it impossible to furnish them with copies of the invoices at issue. In this connection they state that:

i) it is difficult to see how anyone can be held responsible for the consequences of the conduct of third parties, at all events where such conduct is outside the control of the person concerned;

ii) these companies too are required to keep trade invoices only for the period of five years prescribed by the Law of 19 June 1940, and at the present time the nationalization of the electricity industry now in process makes it very difficult to refer to their records;

iii) in these circumstances, the High Authority could have consulted its inspectors to whom the originals of these invoices had been shown and on the basis of the results of the verifications and checks made, could have compared these particulars with the accounting documents still available or called upon the applicants to confirm them on their own responsibility;

iv) as soon as they learned of the judgment of 14 December 1962 and following notification of the Decisions at issue, the applicants asked the electricity supply companies for copies of the invoices required by the High Authority. These companies' answers are given in the reply in the case of each applicant.

Finally the applicants submit that the pecuniary sanctions at issue are illegal and unjustified even when account is taken of the economic capacity of the applicants.

The defendant first makes the point that the amount of the pecuniary sanctions imposed falls far short of the maximum laid down in Article 47 of the Treaty and is moreover proportionate to the seriousness of the offences committed by the applicants. It then observes that the frequency of the checks to which the applicants were subjected should have suggested to them, for the reasons mentioned above, that they ought not to destroy the invoices at issue before the expiry of the period of ten years laid down in Article 2220 of the Civil Code. The defendant also points out, in that part of the statement of defence which is concerned with the facts, that the Decisions of 23 February 1962 laying down the obligation to produce the invoices in question to the High Authority terminated a correspondence between the applicants and the High Authority in which the production of these documents had been asked for in vain.

The defendant then objects that the reference to Article 10 of the Law of 5 January 1956 is irrelevant in the present case. It says on the one hand that no rule of positive or customary law provides, as the applicants allege, that official re-examination using the deductive method is a sufficient sanction and on the other hand that the present applications are made against pecuniary sanctions laid down in Article 47 of the Treaty and not against the assessment of the quantities of ferrous scrap used.

The defendant stresses finally that me reply and the schedules thereto show that the applicants were in a position to obtain information from their suppliers relating to consumption of electricity during the equalization period. Three applicants, (FER. RO., F.E.R.A.M. and S.I.M.E.T.) have in fact obtained some information and, as regards the other applicants, the electricity supply companies only made the point that the necessary investigations could not be made quickly. Moreover even if the applicants have actually destroyed the invoices in question because they were too bulky, the fact nevertheless remains, so the defendant concludes, that if they had asked their suppliers for copies of these invoices as soon as they (the applicants) were notified of the Decisions of 23 February 1962 and not after they were notified of the Decisions of 18 December 1962 they would have avoided, at least in part, exposing themselves to the consequences of which they complain in the present applications.

IV — Procedure

The procedure followed the normal course.

After the reply had been lodged, the applicants in several of the cases produced copies of the correspondence with the High Authority concerning implementation of the Decisions of 18 December 1962. To justify the submission of these documents they refer to a letter concerning Case 2/63 produced by the defendant as a schedule to its rejoinder. They argue that since this letter was produced as being representative, although it was not of this nature, it is indispensible that the entire correspondence between the parties in each case on the same question be submitted to the Court. The applicants in the other cases have reserved the right to produce like documents if need should arise.

By Order or the Court of 14 March 1963 the present cases were joined for the purpose of the written procedure, the oral procedure and the judgment.

Upon hearing the report of the Judge-Rapporteur and upon hearing the Advocate-General, the Court decided to put written questions to the parties, calling upon them to give their replies before 19 October 1963.

Grounds of judgment

Admissibility

1. The defendant contests the admissibihty of the present applications pointing out first that they are made in fact against the Decisions of 23 February 1962 and that they bring before the Court questions already settled by it in its judgment of 14 December 1962. The applications made against the Decisions of 23 February 1962 on which the Court ruled in its judgment of 14 December 1962 concerned the power of the High Authority to require production of the invoices for electric energy consumed by the applicants. In the first applications the applicants maintained that such a power had no basis in Article 47 of the Treaty. The present applications on the other hand are concerned with the pecuniary sanctions imposed by the Decisions of 18 December 1962 for failure to produce these invoices. As to this the applicants make the point that failure to produce these invoices cannot be considered as an infringement of the Decisions of 23 February 1962, the invoices having been destroyed in accordance with the national law applicable in this case. The subject matter of the present applications is thus different from that of the applications against the Decisions of 23 February 1962. Although in course of the oral procedure in the previous case the applicants had already alleged that the production of the invoices at issue required by the High Authority might be made impossible because under Italian law trade invoices need be kept only for five years, the judgment ruled that it is for the High Authority to determine whether failure to produce certain invoices is justified in the light of the relevant legislation and to draw the necessary conclusions. No decision having the force of res judicata has therefore been taken by the Court on the subject matter of the present proceedings. Consequently on this point the present applications must be taken to be admissible.

2. The applicants in Cases 2/63, 3/63, 5/63 and 6/63 make the point that the contested Decisions impose pecuniary sanctions on them for not having produced the electricity invoices relating to the whole period of the operation of the equalization scheme, whilst they have been engaged in the iron and steel industry for only part of this period. The defendant contests the admissibility of this submission, making the point that, as the Decisions of 18 December 1962 were limited to drawing the legal conclusions flowing from the Decisions of 23 February 1962, it is against the last-mentioned Decisions and the obligation they contain that the applicants should have raised such a submission. However, the judgment which settled the applications made against the Decisions of 23 February 1962 accepted as well-founded the power of the High Authority to require production of the invoices for electric energy actually consumed by the applicants during the operation of the equalization scheme. Moreover any sanction imposed by the High Authority can be considered as lawful only if it is directed to an infringement in relation to a decision taken in implementation of the Treaty. In the present case, as failure to produce the electricity invoices relates to a period when the applicants were not engaged in the iron and steel industry, it cannot in any event constitute an infringement of the Decisions of 23 February 1962. Therefore if the allegations of the applicants were to prove to be well-founded the pecuniary sanctions in question would need to be annulled because at least in part they would have no purpose. The submission made by the applicants in Cases 2/63, 3/63, 5/63 and 6/63 is therefore admissible.

3. The defendant then makes the point that the present applications do not satisfy the conditions of admissibility set out in Article 38 (1) (c) of the Rules of Procedure of the Court, as they do not contain a brief statement of the grounds on which they are based. The applicants maintain in their applications that the pecuniary sanctions imposed by the contested Decisions are out of proportion both to the seriousness of the offiences of which they are accused and to the economic capacity of each undertaking. Certain of the applicants further maintain that the pecuniary sanctions have also been imposed for failure to produce electricity invoices relating to a period during which they were not engaged in the iron and steel industry. These submissions are sufficient to justify the making of an appeal in respect of which the Court has unlimited jurisdiction, as provided for in Article 36 of the Treaty. The applications therefore show sufficiently clearly which of the grounds set out in the Treaty are those invoked by the applicants. The present applications are admissible under Article 38 (1) (c) quoted above.

4. Finally the defendant maintains that the present applications, so far as they seek a reduction of the fines and a total remission of the periodic penalty payments, are inadmissible because they contain no reference to Article 36 of the Treaty and set out no criticism of the application of this Article by the High Authority. According to the Rules of Procedure of the Court it is unnecessary for an applicant to indicate, for the purpose of admssibility, the provisions of the Treaty under which he is entitled to bring his action. Any appeal against pecuniary sanctions imposed by the High Authority is by its very nature based on Article 36 of the Treaty and there is no need to invoke that Article expressly. Having regard to the purpose of the present applications, it is abundantly clear that these are based on Article 36 of the Treaty. As the appeals provided for in this Article confer unlimited jurisdiction upon the Court, the applicants are entitled to avail themselves of the grounds set forth in Article 33 of the Treaty. In these circumstances the objection raised by the defendant does not appear well-founded.

The substance

A — Annulment of the fines

1. The applicants rely on Italian fiscal law to justify the alleged destructior of the electricity invoices at issue and to claim that in these circumstances they should not be held liable for not having produced the invoices in question in accordance with the Decisions of 23 February 1962. The submission made by the applicants assumes that the Decisions of 23 February 1962 must be interpreted as requiring only production of the originals of the electricity invoices. However, neither the letter nor the spirit of these Decisions justifies such an interpretation. They are limited by Article I thereof to requiring production of ‘all invoices for electric energy … relating to the activity of the undertaking for the period from April 1954 to November 1958 inclusive’ without specifying that they must be originals only. Further, taking account of the fact that the purpose of producing the invoices at issue was to enable the High Authority to check the information required for the application of the equalization scheme for imported ferrous scrap, the applicants had no reason to think that only production of the original accounts would have served this purpose. In addition, in the letters of 27 November 1961 addressed to the applicants, the High Authority had expressly stipulated that in the absence of the original electricity invoices the applicants were required to produce ‘certified copies or photocopies’. Enclosed with these letters were several forms for completion by the addressees in which ‘copies or photocopies’ were also mentioned. All the applicants received this letter and answered it, either contesting the legality of the request by the High Authority or asking it to withdraw its request, or failing that, to confirm it by way of a Decision applicable to all undertakings in the same line of business. Thereupon the High Authority adopted the Decisions of 23 February 1962 repeating the obligation contained in the letters of 27 November 1961. In the circumstances these letters constitute as it were a measure preparatory to the Decisions of 23 February 1962 and the applicants can in no way allege that these Decisions must be interpreted as requiring production only of the originals of the invoices at issue. In any event, when account is taken of the above-mentioned letters, the applicants should have taken the precaution of keeping the electricity invoices in anticipation of the Decisions which the High Authority might take in the matter. It is clear from the answers given to the questions asked by the Court that the destruction of the invoices took place only after these letters had reached the applicants. It therefore follows that even if the applicants had destroyed or lost or had never kept the originals of the invoices at issue, they ought to have asked the electricity supply companies for copies of them upon being notified of the Decisions of 23 February 1962, thus endeavouring to comply with these Decisions. Instead, the applicants instituted annulment proceedings alleging that the power of the High Authority to require transmission of accounting documents had no foundation in the Treaty. Only between December 1962 and January 1963, that is at least ten months after being notified of the Decisions of 23 February 1962, did they for the first time ask the electricity supply companies to furnish them with a copy of each invoice. It must therefore be declared that, up to the time of adoption of the Decisions imposing the pecuniary sanctions at issue, the applicants failed to fulfil the obligation imposed on them by the Decisions of 23 February 1962. This conclusion applies with particular force to the applicant in Case 2/63 who right up to October 1962 was in a position to produce the originals of the invoices at issue and, having regard to the date when these invoices were destroyed, all reference to Italian fiscal law is irrelevant in the present case. In these circumstances the imposition of the fine provided for in the Decisions of 18 December 1962 for infringement of the obligation contained in the Decisions of 23 February 1962 is justified.

2. The applicants further maintain that the contested Decisions discriminate against them, as pecuniary sanctions were not imposed on the applicant in Case 18/62 who was in a similar position. It appears however from the foregoing considerations that the imposition of pecuniary sanctions is fully justified in the present case by reason of the infringement of the Decisions of 23 February 1962. In these circumstances it is of little consequence to determine whether in allegedly comparable cases the High Authority should have imposed the same pecuniary sanctions. Therefore the complaint of discrimination raised must be dismissed as unfounded.

3. The applicants in Cases 2/63, 3/63, 5/63 and 6/63 raise the further point that as they were not engaged in the iron and steel industry for part of the period during which the equalization scheme was in operation, the imposition of a fine for failure to produce electricity invoices relating to the whole of this period is illegal because it is unfounded and constitutes a misuse of powers. Article 1 of the Decisions of 23 February 1962 provides that the applicant shall produce the electricity accounts ‘relating to the activity of the undertaking for the period from April 1954 to November 1958 inclusive’. It follows from these words that the obligation there stated applies only to invoices relating to business in the iron and steel industry in fact carried on by each applicant during that period. The Decisions of 18 December 1962, reciting the operative part of the Decisions of 23 February 1962 as quoted above therefore lay down pecuniary sanctions only for infringement of this obligation, whatever may have been the actual period during which each undertaking was actively engaged in the iron and steel industry while the equalization scheme was operative. Therefore the submission raised by the applicants in the above-mentioned cases is unfounded.

B — Reduction of the amount of the fines

In their alternative conclusions the applicants request a reduction in the amount of the fines having regard on the one hand to the fact that the uncertain and equivocal conduct of the High Authority led them to commit a justified error in law and on the other hand to the fact that this amount is out of proportion to the economic capacity of each undertaking.

As regards the first argument, the preceding considerations show that no error in law can validly be invoked by the applicants since the obligation to produce certified copies of the invoices at issue, in the absence of the originals, is plain from the Decisions of 23 February 1962 as well as from the letters of 27 November 1961.

As regards the second argument, the applicants have not furnished the Court with a shred of factual evidence to show that the amount of the fines is out of proportion to the economic capacity of each undertaking. Moreover this amount does not appear to be excessive because it falls far short of the maximum laid down in Article 47 of the Treaty.

For these reasons the above-mentioned alternative conclusions must be dismissed.

C — Annulment of the periodic penalty payments

The applicants claim, in the further alternative, that exoneration from the payment of the periodic penalty payments imposed by the contested Decisions should be granted.

In furtherance of this claim they raise the point that, as production of copies of the invoices at issue to the High Authority could only be made after delivery of these copies by the electricity supply companies, the applicants cannot be held responsible for the delay in producing them.

To justify this delay the applicants refer to the physical difficulties alleged in the answers to the letters asking for delivery of the copies of the invoices at issue.

Without regard to the question whether the invoices were in fact destroyed it can be said that the delay in production of these copies is due in large measure to the fact that the applicants only applied to the electricity supply companies in December 1962 at the earliest, that is, after a considerate lapse of time from their being notified of the Decisions of 23 February 1962.

Therefore the physical difficulties which the electricity supply companies mention cannot relieve the applicants of all responsibility in this matter.

These difficulties can nevertheless be taken into account in fixing the time from which the periodic penalty payments at issue are applied.

In these circumstances, the periodic penalty payments must be maintained but the period at the end of which they take effect must be extended to seven months from the notification of the contested Decisions.

Costs

Under the terms of the first subparagraph of Article 69 (3) of the Rules of Procedure, where each party succeeds on some and fails on other heads, the Court may order that the parties bear their own costs in whole or in part.

The defendant has been unsuccessful in part in the submission relating to the annulment of the periodic penalty payments.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to Articles 33, 36 and 47 of the Treaty establishing the European Coal and Steel Community; Having regard to the Protocol on the Statute of the Court of Justice of the European Coal and Steel Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities; THE COURT hereby declares that:

1 The applications are admissible;

2 The applications are dismissed as unfounded. Nevertheless the time limit at the end of which the periodic penalty payments imposed by the Decisions of 18 December 1962 take effect is extended to seven months from the notification of the latter;

3 Four fifths of the costs are to be borne by the applicants and the remaining one fifth thereof by the defendant.