JUDGMENT OF 11. 10. 1973 — CASE 39/73 REWE-ZENTRALFINANZ v LANDWIRTSCHAFTSKAMMER WESTFALEN-LIPPE
In Case 39/73 Reference to the Court under Article 177 of the EEC Treaty by the Oberverwaltungsgericht für das Land Nordrhein-Westfalen for a preliminary ruling in the action pending before that Court between
THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, H. Kutscher, C. Ó Dálaigh, M. Sørensen, and Lord Mackenzie Stuart (Rapporteur), Judges, Advocate-General: A. Trabucchi Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure
The facts and procedure may be summarized as follows:
The plaintiff company, an agricultural cooperative whose registered office is in Cologne, imported from Italy in March 1970 a quantity of 19195 kg of apples.
The defendant carried out a phyto-sanitary examination of the fruit on 25 March 1970. The defendant then demanded from the plaintiff, by notice dated 26 March 1970, 29.10 DM for examination charges.
The plaintiff took the view that this sum constituted a ‘charge having an effect equivalent to customs duties’, prohibited by Article 13 (2) of the EEC Treaty and by Article 13 of EEC Regulation No 159/66 of the Council (OJ 1966, p. 3286), and applied to the Verwaltungsgericht Munster to quash the demand notice for the charges. After its application was rejected the plaintiff appealed to the Oberverwaltungsgericht für das Land Nordrhein-Westfalen.
By order dated 19 January 1973 the said Court stayed proceedings and submitted to the Court of Justice of the European Communities the following questions:
a) Does the term ‘charges having an effect equivalent to customs duties on imports’ (Article 13 (2) EEC Treaty) also include administrative charges for the phyto-sanitary examination (in the present case fruits of plants) on the import from one Member State of the European Economic Community into another?
b) If so, does this also apply if the charge provided for merely covers, or does not even cover, the cost of the examination?
The order was registered at the Court on 9 March 1973.
In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC the plaintiff and the Commission of the European Communities have submitted written observations.
On the report of the Judge-Rapporteur, after hearing the Advocate-General, the Court decided to proceed without any preparatory inquiry.
The plaintiff and the Commission of the European Communities presented oral arguments at the hearing on 20 September 1973.
The plaintiff was represented by Mr G. Meier.
The Commission was represented by its legal adviser Mr Oldekop.
The Advocate-General delivered his opinion at the same hearing.
II — Observations submitted under Article 20 of the Statute
The observations submitted to the Court under Article 20 of the Statute can be summarized as follows:
A — Observations submitted by the plaintiff
First Question
The plaintiff observes that the Court replied in Case 29/72 — Marimex v Amministrazione ltaliana delle Finanze, (Rec. 1972), ‘pecuniary charges imposed for reasons of hygiene control of products when they cross the frontier, which are determined according to criteria of their own, which criteria are not comparable with those for determining the pecuniary charges attaching to similar domestic products, are deemed charges having an effect equivalent to customs duties’.
Since phyto-sanitary examinations come under hygiene controls, the Court has already in Case 29/72 given an answer to the first question.
After having examined the scope of this judgment the plaintiff submits that to exclude the charge payable on import from being classed as equivalent to a customs duty it would be necessary that hygiene controls carried out on domestic products and on imported goods should be identical, both as regards the objective which they pursue and in their structure, and that it should be possible to compare the criteria determining the amount of the charge.
Second Question
The plaintiff cites the judgments of the Court in the following cases:
52 and 55/65 — German Federal Republic v Commission, Rec. 1966;
7/68 — Commission v Italian Republic, Rec. 1968;
24/68 — Commission v Italian Republic, Rec. 1969;
2 and 3/69 — Sociaal Fonds voor Diamantarbeiders v Brachfeld, Rec. 1969,
and submits that any financial charge, however small, can constitute a charge having an effect equivalent to customs duties.
B — Observations of the Commission of the European Communities
The Commission first of all examines the legislation regarding charges for phyto-sanitary examinations in the German Federal Republic and then legislation dealing with imports of vegetable substances in the other Member States. It appears that quite a number of Member States do not make charges for inspection of vegetable substances and vegetable products carried out on import.
This, in its view, confirms the fact that to forgo such charges ought not to pose insurmountable financial problems for the other Member States.
First question
The Commission observes that the first question is concerned with the interpretation of Community law as regards charges payable for phyto-sanitary examination on imports and not the examination measures themselves.
It is of the opinion that the findings which the Court made in Case 29/72 apply equally to the charges in question. Even if that judgment were to apply only within the scope of the request for interpretation which was then formulated, nevertheless the lawfulness of a charge should be accepted only after being examined according to the most strict criteria and especially taking into account the principle that any exception to the prohibition on the levying of customs duties and charges having equivalent effect must be interpreted strictly: there must be some benefit from the services of the authority, conferring on the goods charged a concrete and demonstrable advantage. The charge payable must not exceed the value of the advantage conferred on the goods by the services rendered. It is apparent from the Court's decisions that mere permission to put certain products into circulation in the importing country does not represent an advantage for which consideration may be demanded. Nor is it sufficient that the benefit of the services of the administration accrues to the economy as a whole, if it affords importers or exporters only a general advantage and one which is difficult to estimate. Phyto-sanitary examinations on imports do not confer on the products subject to the examination advantages for which consideration may be demanded in the form of a charge.
These examinations by their very nature are not made in the interests of the imported goods but serve to implement prohibitions or restrictions on import imposed in the public interest.
Apart from the examination of imports, in numerous cases Member States prescribe that an official phyto-sanitary certificate must be produced. Imported products will have been only submitted to general phyto-sanitary measures in the country of origin itself, which should already suffice to guarantee to a large extent that the products are free from noxious organisms. The fact that the imported goods may be put on sale in the importing country should the examination on import have a positive result, does not represent for such goods an advantage to be taken into account.
It notes that the charges in question are subject to the prohibition on levying duties and charges having an equivalent effect within the framework of intra Community trade. This finding is however linked with a restriction, for the prohibition would not take effect ‘if the pecuniary charges fell under a general system of domestic dues systematically embracing domestic products and imported products according to the same criteria.’
This restriction arises from the fact that the Member States are in principle authorized, provided that any fiscal provisions of Community law which may be applicable are respected, to extend domestic financial charges on certain goods to similar imported goods, provided it is done in a non-discriminatory manner. Charges of this kind do not in any case affect imported products by reason of their crossing the frontier, but in principle for the same reasons which have led to the introduction of the charge in question within the particular Member State.
A correspondence with the internal charges can only be said to exist if these charges directly affect similar domestic goods and if they are payable for examinations the reason and object for which correspond to the examinations of imported products and on the same footing.
Second question
In the opinion of the Commission a negative reply should be given to this question. Such a reply arises in the first place from the very concept of a charge having an effect equivalent to a customs duty as it has been developed by the case law of the Court. The decisive criterion is whether the financial charges imposed by reason of crossing the frontier cause the free movement of goods to be impeded. The prohibition would then hold good independently of the object for which the charges in question were instituted and the destination of the revenue which they produce.
Final observation
The Commission recalls that as long ago as 31 March 1965 it submitted to the Council a proposal for directives establishing measures prohibiting the introduction into Member States of organisms noxious to vegetable substances. It is proposed that Member States provide for a compulsory inspection of vegetable substances in the country of export, and the issue of an official phyto-sanitary certificate. Regular examinations effected in the consignee state would in turn be progressively abolished. If this proposal were approved by the Council the charges relating to phyto-sanitary control on import would disappear with the abolition of the measures of control themselves.
Grounds of judgment
1. By order dated 19 February 1973, lodged with the Registry of the Court on 9 March 1973, the Oberverwaltungsgericht für das Land Nordrhein-Westfalen submitted two questions of interpretation of the concept of ‘charges having an effect equivalent to customs duties on imports’ contained in the opening sentence of Article 13 (2) of the EEC Treaty.
2. The first question is directed to whether a pecuniary charge imposed for reasons of phyto-sanitary examination carried out on vegetable substances at the time when they cross the frontier must be regarded as a charge having an effect equivalent to customs duties within the meaning of Article 13 (2) of the Treaty. The second question asks whether it is the same in the case where the charge provided for merely covers, or does not even cover, the cost of the examination on import.
3. The concept of charges having an effect equivalent to customs duties on imports is directed to any charge exacted at the time or because of import, which, specifically affecting an imported product to the exclusion of a similar domestic product, has the same restrictive effect on the free movement of goods as a customs duty. Since the obligation to abolish these charges at the end of the transitional period does not allow any distinction according to the end pursued by the collection of the pecuniary charges, or their amounts, it thus covers duties exacted for phyto-sanitary examinations carried out because the goods are imported. It would only be otherwise if these charges fell under a general system of domestic dues systematically embracing domestic products and imported products according to the same criteria.
4. Although it is not ruled out that there may be certain circumstances in which a particular service rendered may possibly give rise to some consideration, which should not exceed either the value or the cost of the service, they can only be special cases which cannot lead to the provisions of Article 13 of the Treaty being circumvented. The activity of the administration of the State intended to maintain a phyto-sanitary system imposed in the general interest cannot be regarded as a service rendered to the importer such as to justify the imposition of a pecuniary charge.
5. Consequently, pecuniary charges, whatever their amount, imposed for reasons of phyto-sanitary examination of products when they cross the frontier, which are determined according to criteria of their own, which criteria are not comparable with those for determining the pecuniary charges attaching to similar domestic products, are deemed charges having an effect equivalent to customs duties.
Costs
6. The costs of the Commission of the European Communities, which has submitted observations to the Court, cannot be reimbursed, and since as regards the parties in the main action the present proceedings are a step in the action pending before the national court, the question of 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 arguments of the plaintiff in the main action and the Council of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 13 and 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 Oberverwaltungsgericht für das Land Nordrhein-Westfalen by order of that court dated 19 February 1973, hereby rules:
1 Pecuniary charges, whatever their amount, imposed for reasons of phyto-sanitary examination of products when they cross the frontier, which are determined according to criteria of their own, which criteria are not comparable with those for determining the pecuniary charges attaching to similar domestic products, are deemed charges having an effect equivalent to customs duties.
2 The activity of the administration of the State intended to maintain a phyto-sanitary system imposed in the general interest cannot be regarded as a service rendered to the importer such as to justify the imposition of a pecuniary charge.