JUDGMENT OF 3. 6. 1979 — CASE 135/79 GEDELFI v HAUPTZOLLAMT HAMBURG-JONAS

In Case 135/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Hamburg for a preliminary ruling in the action pending before that court between

THE COURT composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, G. Bosco and T. Koopmans, Judges, Advocate General : J.-P. Warner Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and written procedure

(a) The regulations concerned

Council Regulation No 516/77 of 14 March 1977 (Official Journal L 73, p. 1) on the common organization of the market in products processed from fruit and vegetables makes provision for the imposition, in addition to a customs duty, of an import levy in the Community on added sugar contained in the products listed in Annex I thereto. In order to prevent, in a simple fashion, the application of the levy to products having a high concentration of natural sugar (as compared to added sugar) the Council exempted fruit juices having a value for customs purposes exceeding a specific amount from the levy (cf. Regulation No 455/69 of the Council, Official Journal, English Special Edition 1969 (I), p. 103, which was repealed and replaced by Regulation No 516/77). This amount was fixed at 30 units of account per 100 kg net weight in regard to orange juice falling within subheading 20.07 B of the Common Customs Tariff. Thus Article 2 of Regulation No 516/77 in conjunction with Annex I thereto makes provision for a levy on orange juice having a value for customs purposes not exceeding 30 units of account per 100 kg net weight. This product falls within subheading 20.07 B II (b) 1 of the Common Customs Tariff. On the other hand orange juice having a value for customs purposes exceeding 30 units of account per 100 kg net weight falling within subheading 20.07 B II (a) 1 of the Common Customs Tariff is exempt from the levy.

Under the General Rule C.3 for the interpretation of the Common Customs Tariff (cf. Regulation No 950/68 in the version contained in Regulation No 2500/77, Official Journal 1977, L 289, p. 1) to which Article 13 (1) of Regulation No 516/77 refers the exchange rate to be used in converting the relevant amount into the national currencies shall be “that corresponding to the par value communicated to and recognized by the International Monetary Fund in respect of these currencies”. The par value communicated at that time to the IMF by the Federal Republic of Germany was DM 3.66. Thirty units of account was therefore equivalent to DM 109.80.

This system was then amended from 1 January 1979 following the introduction by Council Regulation No 2779/78 (Official Journal 1978, L 333, p. 5), of the European unit of account (“basket” unit) into the Common Customs Tariff.

In order to assess whether the goods imported are actually subject to the levy, their yalue for customs purposes is calculated in accordance with the provisions of Regulation No 803/68 of the Council on the valuation of goods for customs purposes, applicable in this case in the version contained in Regulation No 338/75 of the Council (Official Journal 1975, L 39, p. 5). Article 12 of that regulation provides that where factors used to determine the value for customs purposes of goods are expressed in a currency other than that of the Member State where the valuation is made, the rate of exchange to be used shall be the latest selling rate recorded on the most representative exchange markets of that Member State.

By Commission Regulation No 2857/77, implementing Article 2 (3) of Regulation No 516/77, the amount of the levy referred to above was fixed in regard to the period from 1 January to 31 March 1978 at 0.2568 units of account per 100 kg net weight.

Finally, whenever the levy must actually be charged it is calculated by using the “green rate”. Article 2 (1) (c) of Council Regulation No 878/77 (Official Journal 1977, L 106, p. 27) markes provision for an exchange rate of DM 1 = 0.293033 units of account.

(b) Facts

The dispute giving rise to the judgment making the reference concerns the legality of a notice of assessment issued by the Hauptzollamt Hamburg-Jonas and based on provisions of Community law.

In January 1978 the Gedelfi-Großeinkauf imported into Germany four consignments of orange juice from Israel. It declared those goods under subheading 20.07 B II (a): fruit juices of a specific gravity of 1.33 or less at 15° C of a value exceeding 30 units of account per 100 kg net weight, orange juice. On this basis and taking into account the preference system, it calculated the customs duty which it owed at 5.7% and paid the corresponding sum. Since the declaration was made unter Article 40 (a) of the Zollgesetz (German Customs Law) the duties were paid subject to confirmation.

When it came to examine the customs declaration the Hauptzollamt Hamburg-Jonas came to the conclusion that the goods had to be classified under sub-heading 20.07 B II (b) 1 (aa) of the Common Customs Tariff.

In fact the Hauptzollamt accepted the invoice price expressed in United States dollars in accordance with Article 9 of Regulation No 803/68 on the valuation of goods for customs purposes and in application of Article 12 of the same regulation (in the version amended by Regulation No 338/75 referred to above) converted this amount into German marks applying the most representative latest selling rate (1 United States dollar = DM 2.10). The values obtained for the four consignments of goods imported were as follows:

DM 98.94 per 100 kg net weight

DM 103.63 per 100 kg net weight

DM 103.63 per 100 kg net weight

DM 100.69 per 100 kg net weight.

Having found that all these values were below the relevant limit of value in the tariff which was 30 units of account = DM 109.80, it considered that the goods in question had therefore to be classified under subheading 20.07 B II (b) 1 (aa) of the Customs Tariff.

By Article 2 and Annex I to Council Regulation No 516/77 of 17 March 1977 (Official Journal L 73, p. 1) in conjunction with Commission Regulation No 2857/77 of 21 December 1977 (Official Journal L 329, p. 35), goods falling within this subheading must be charged a levy. Furthermore these goods are subject to the German tax on sugar.

Therefore by a notice of corrective assessment of 1 March 1978 the Hauptzollamt Hamburg-Jonas demanded that Gedelfi pay a levy of DM 23672.59 and a sugar tax of DM 2089.29. Gedelfi lodged an objection against this notice on 10 March 1978.

It does not contend that the Hauptzollamt Hamburg-Jonas incorrectly applied the provisions of the Common Customs Tariff and those of the levies system but it maintains that those same goods could have been imported into other Member States (Belgium, Denmark, France, Italy, United Kingdom) free of levy under the same provisions because conversion into the different national currencies of those countries would have resulted in the goods being valued at more than 30 units of account per 100 kg. It therefore believes that the application of these provisions constitutes a discriminatory measure contrary to Articles 3 (d), 18, 39, 40, 110 and 113 of the EEC Treaty.

By a decision of 13 October 1978 the Hauptzollamt Hamburg-Jonas dismissed the objection as unfounded. Gedelfi then brought an action before the Finanzgericht Hamburg.

By an order of 20 July 1979 the Finanzgericht stayed the proceedings and asked the Court of Justice to give a preliminary ruling under the first paragraph of Article 177 of the EEC Treaty on the following questions:

“1. Is Article 2 of Council Regulation (EEC) No 516/77 of 14 March 1977 in conjunction with Annex I thereto and with Article 1 of Commission Regulation (EEC) No 2857/77 of 21 December 1977 invalid in so far as it provides for a levy on products falling within tariff subheading 20.07 Β II (b) 1 of the Common Customs Tariff the value of which, on the basis of the rate of exchange laid down in Rule 3 under Head C of the General Rules contained in Section I of Part I of the annex to Regulation (EEC) No 950/68 of the Council on the Common Customs Tariff in the version of Council Regulation (EEC) No 2500/77 of 7 November 1977, is 30 units of account or less per 100 kg net weight when the products are imported into the Federal Republic of Germany, if the value of the same products would be more than 30 units of account when imported into the other Member States, assuming the same import price on the basis of the dollar, so that it would not be necessary to charge a levy in the other Member States? 2. If the answer to Question 1 is in the affirmative: May the national authorities or courts themselves waive the charging of the levy on the ground of the declaration of invalidity made by the Court of Justice of the European Communities, or does this require an order by the competent legislature? 3. If the answer to Question 1 is in the negative: May the national authorities or courts in the case mentioned in Question 1 waive the charging of the levy on the ground that the imposition of a levy would lead to a violation of the principle of equality which would conflict with the precepts and values of the legislature?”

According to the grounds on which the order containing the reference is based the Finanzgericht views the unequal burden of taxation existing between the different Member States as a breach of the prohibition of discrimination contained in the second subparagraph of Article 40 (3) of the EEC Treaty and furthermore as a breach of the genera! principle of equality. However that court does not believe that it itself can declare Community regulations applicable to the matter to be void, as the plaintiff in the main action suggests.

The court points out that Questions 2 and 3 concern a practical way of resolving the dispute. In its opinion the principle of equality can be observed in this case only if the plaintiff is exempted from the taxation imposed on it. For reasons based on the rule of law and for practical reasons it is not possible to create equality by charging the levy subsequently on imports into the other Member States. Another way of resolving the matter would be for national authorities or courts to be given the power in cases like this to waive the charging of a duty without expressly declaring that the relevant provisions are invalid whenever the charging of such a duty resulted in a burden which is contrary to the principle of equality.

The order making the reference was registered at the Court on 21 August 1979.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were lodged by Gedelfi Großeinkauf GmbH & Co., KG, the plaintiff in the main action, represented by D. Ehle, Advocate at the Cologne Bar, by the Council of the European Communities, represented by D. Vignes, Director in its Legal Department, acting as Agent, by the Commission of the European Communities, represented by its Legal Adviser, P. Gilsdorf and by M. Beschel, a member of its Legal Department, acting as Agents.

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 preliminary inquiry.

II — Summary of the written observations lodged at the Court

Question 1

Gedelfi, the plaintiff in the main action, first of all observes that the specific problem in the case lies not so much in the sphere of tariff classification as in the large parity fluctuations between the various currencies in relation to one another, in particular of the German mark in relation to the dollar.

The Community institutions were aware of this problem and had tried to amend the rules in such a way as to avoid distortions where customs duties are concerned. It recalls -the special rules introduced for cheese by Regulation No 656/75 (Official Journal 1975, L 72, p. 1) and for wine by Regulation No 1167/76 (Official Journal 1976, L 135, p. 42) which in customs matters gave binding force to the representative exchange rates in the agricultural sector (“green rates”).

Gedelfi thinks that the charging of the levy on the orange juice which it imported into the Federal Republic of Germany is illegal for several reasons.

The principle of the Common Customs Tariff and that of a common system for charging a levy on a product coming under an organization of the market necessarily requires equality of treatment and therefore the charging of an identical levy at any place at the external frontier of the Common Customs territory. Those essential requirements arise from the principles of the customs union (Articles 18, 110 and 113 of the EEC Treaty), from the prohibition of distortion of competition (Article 3 of the EEC Treaty), from the uniform application of the rules of the organizations of the markets in respect of imports from non-member countries (Articles 39, 40 and 43 of the EEC Treaty) and from the prohibition of distortion of competition in regard to intra-Community trade (Articles 9, 12 and 30 of the EEC Treaty) : cf. judgment of the Court of 13 December 1973 in Joined Cases 37 and 38/73 Sociaal Fonds voor Diamantarbeiders v Indiamex [1973] ECR 1609.

Furthermore the charging of import duties in the Community which differ according to the place of importation is contrary to the prohibition of discrimination contained in the second subparagraph of Article 40 (3) of the EEC Treaty. Because of the prohibition of discrimination a German importer of orange juice who imports the goods through Hamburg may not be made to pay a levy upon them since a French, Belgian or Dutch importer may import the same goods at the same import price expressed in dollars through Marseille, Antwerp or Amsterdam free of levy. This principle applies particularly to products which come under a common organization of the market as is the case with orange juice.

Moreover, the Community institutions were aware of the distortion of competition which the continued existence of General Rule C.3 in tariff classification matters could entail after the introduction of floating exchange rates in 1971. The fact that up to and including 1978 this rule had not been amended and the traditional unit of account had subsisted constitutes a clear and unacceptable omission on the part of the Community legislature. This omission is all the more evident in the light of the delays in adopting the regulation to introduce the European unit of account (EUA). Application of the EUA in this case would have enabled the orange juice to be imported free of levy.

Finally, the plaintiff in the main action relies on the purpose of the reference values which is to exempt from the levy certain fruit juices of a high value which also have a high natural sugar content. The continuance of an exchange rate, fixed in a theoretical and improper manner, for calculating the reference

value defeats that purpose. It is precisely in the countries whose currencies are appreciating, as in Germany, that reference values expressed in units of account have led to the charging of a levy even when the values of the goods were very high.

For those reasons the plaintiff in the main action thinks that the provisions referred to in Question 1 are no longer valid.

It wonders however whether, after the replacement of the unit of account by the European unit of account (EUA), the Court has to give a judgment of such extensive scope. It recalls the “equitable” solution to the problem adopted in the judgment of 1 February 1978 (Case 78/77 Liirs ν Hauptzollamt Hamburg-Jonas [1978] ECR 1969), which consisted in the application of a less burdensome rate of exchange for the party concerned. Consequently it suggests that the answer in the present case should be that when the reference value of 30 u.a./100 kg net weight is applied in the context of subheading 20.07 Β II natural justice requires that the reference value to be used is the one at which the goods in question could be imported free of levy at the relevant time, at the same import price expressed in dollars, into another Member State of the EEC.

The Commission admits that the situation which arises in this case, namely the unequal financial treatment of identical goods despite identical applicable provisions, is a surprising one. That is why it first makes a point of outlining the position of the unit of account in the course of monetary developments.

The Commission explains that ever since the introduction of the unit of account, first under the Financial Regulation of 1960, and later in the course of the framing of the Common Customs Tariff, the reference value chosen was a specific quantity of gold, namely 0.88867088 gramme of fine gold. The advantage of this unit of account was that it could correspond to fixed monetary parities introduced under the Bretton Woods Agreement of 1944 concerning the International Monetary Fund (IMF).

However, right from the beginning the Community legislature was faced with the problem that monetary policy itself is not governed by Community law.

From 1971 the system of fixed parities based on reference to gold ceased to be wholly workable. Subsequent monetary developments led to considerable alterations in the actual exchange rates compared to the official parities in the relations between the Member States, particularly from about 1975. In the circumstances, the unit of account used in the Common Customs Tariff began to relate less and less to economic reality. To the extent to which the unit of account was used for the purpose of determining limits for the classification of goods, this situation proportionally increased the chances of disparities occurring in classification.

Faced with unpredictable monetary developments the Community legislature remedied these inequalities of treatment by introducing timely measures (values for customs purposes, classification of certain agricultural products) and by taking measures in certain sectors (“green rates” in the sphere of the organizations of agricultural markets, in conjunction with monetary compensatory amounts).

The chances of finding a comprehensive solution had been closely linked to the efforts made to achieve world monetary reform. In parallel with those attempts at international level to achieve reform, from 1975 the Community legislature developed the concept of a “basket” unit. The area of application of this unit was progressively enlarged with its adoption by:

Council Decision of 21 May 1975 (Official Journal L 104, p. 35) for financial aids provided for by the ACP-EEC Convention of Lomé;

Decision of the Board of Governors of 18 March 1975 for the European Investment Bank;

Commission Decision No 3289/75 of 18 December 1975 (Official Journal L 327, p. 4) for the sphere of the ECSC Treaty;

The Financial Regulation of 31 December 1979 (Official Journal L 356, p. 1) for the budget of the European Communities.

Finally by introducing the European Monetary System (from 1 January 1979) the Community legislature endeavoured to turn the Community into an area of monetary stability. The solution which therefore proved possible for customs purposes was to introduce the European unit of account in the sphere of Community customs as well from 1 January 1979.

Viewed in the light of these considerations the allegation of discrimination made against the Community legislature amounts to saying that when confronted with monetary developments which led to goods being treated differently for classification purposes in the various Member States the Community legislature failed to fix a conversion rate in line with economic reality or to make sure by some other means that it was not possible for the burden of taxation to vary according to the particular Member State into which goods were imported.

The Commission admits that in principle discrimination within the meaning of Article 40 (3) of the EEC Treaty may result from an omission (cf. judgment of 19 October 1977 in Joined Cases 124/76 and 20/77 Moulins Pont-à-Mousson ν Office Interprofessionnel des Céréales [1977] ECR 1795. However it wonders whether Article 40 (3) has application to this case.

The crucial question is whether in fact there is, as a result of an omission on the part of the legislature, unequal arbitrary treatment, objectively unjustified, of two indentical situations which amounts to a form of discrimination.

The fact that in particular cases disparities have been seen to lead to financial disadvantages for several traders is not sufficient to prove discrimination on the part of the legislature (judgment of 24 October 1973 in Case 43/72 Merkur v Commission [1973] ECR 1055, paragraph 19 et seq.).

Such discrimination is established by the existence of a legal obligation upon the Community legislature to lay down specific rules for the period between 1972 and 1978 to prevent such inequality of treatment in matters of tariff classification and therefore in regard to taxation on the importation of goods into the Community. Viewed in the light of the principle of equality such an obligation exists whenever the legislature cannot adduce any objective reason to justify its omission.

The Commission puts forward three kinds of considerations to show that the Community legislature cannot be put at fault.

First it maintains that the use of a unit of account is likely to have different legal consequences in each Member State so long as no Community monetary policy exists and the currencies of Member States may to a large extent fluctuate independently of Community criteria. In the meantime the attainment of equality of treatment in the narrow sense of the term, in the acts of the Community, is impossible. Reference to the “basket” unit presently in force does not afford such a guarentee either.

Thus the complexity of the problem of finding ways to ensure that the Common Customs Tariff applies uniformly necessitates the Community legislature's having a wide margin of discretion to decide if and at what stage of monetary development it thinks legislative adjustments must be made (cf. judgments in Cases 43/73 Merkur ν Commission [1973] ECR 1055, paragraph 20: 9 and 11/71 Cie d'Approvisionnement ν Commission [1972] ECR 391, paragraph 28 et seq.; 28/74 Gillet v Commission [1975] ECR 463).

The Commission goes on to consider that the complaint brought against the Community legislature of having remained inactive in face of the development of the monetary situation, or of having waited too long to introduce the new reference unit, is unfounded.

It was not until 1974 that monetary developments produced appreciable and clearly discernible inequalities in the application of customs regulations. Since that time the Community legislature, as has already been explained, prepared the way for the progressive introduction of a new unit of account, the “basket” unit. The delay by the Community institutions in immediately introducing the new “basket” unit into spheres other than those referred to, and in particular into the customs sphere, is largely attributable to the uncertainty about the evolution of the world monetary situation. In this regard the Commission recalls, first, the link between the Kingston Conference of January 1976 on the reform of the international monetary system and its proposal of October 1976 for a regulation concerning the European unit of account and, secondly, the connexion between the entry into force on 1 April 1978 of the amendments to the Articles of the IMF and the entry into force on 1 January 1979 of Regulation No 2779/78 on the application of the European unit of account in the customs sphere.

Thirdly the Commission thinks that the Community legislature was right to decide against introducing a new interim or transitional conversion rate for the application of the Common Customs Tariff.

Thus, for example, “green rates” have fluctuated in such a way that they only reflect actual exchange rates for some currencies in a very limited way. Moreover the decision to apply the “green rate” to two products, namely wine (subheading 22.05 C) and cheese (heading 04.04), was not taken for customs purposes but in order to enable quite specific agricultural arrangements to continue to work.

The application of the “latest selling rate recorded on the most representative exchange... markets of that Member State” did not achieve satisfactory results either. Indeed, the practical necessities of the Common Customs Tariff rule out using daily exchange rates.

Moreover the introduction into the customs sphere of new conversion rates has brought about considerable disparities in regard to the shares of Member States in Community tariff quotas and had an effect on specific duties fixed in units of account. The solving of these particular problems must be achieved in the context of fundamental reforms which have been progressively undertaken since 1975.

The Commission draws attention to the fact that the 130 odd subheadings for which the customs duty is expressed in units of account relate to duties which are consolidated under GATT. Unilateral changes made following the introduction of new conversion rates have inevitably led to disagreements with other countries which are parties to GATT where commercial policy is concerned. It recalls here that consultations took place within the framework of GATT with the main trading partners of the Community when the new “basket” unit was introduced into the Common Customs Tariff.

The Commission claims that all in all the effect which the evolution of the monetary situation has had on customs classification does not appear seriously to have interfered with trade. During the course of the whole of the period from 1971 to 1978 no complaint was made to the Commission by traders who were at a disadvantage nor was the Commission aware of any changes in the pattern of trade.

The Council does not share the argument put forward by the plaintiff in the main action either. It recalls that the system embodied in Regulation No 516/77 was introduced into Community law in 1968 by Regulation No 865/68 (Official Journal, English Special Edition 1968 (I), p. 225) and that the validity of those regulations has not been challenged. If the provisions in question were now to be considered as discriminatory and possibly as invalid, they would have had to become so at some time between June/July 1968 and January 1978.

In regard to the question whether the Community legislature should have intervened in some other way during that period in order to bring the provisions under attack into line with the evolution of the monetary situation the Council advances arguments which are very much the same as those put forward by the Commission.

After its opening remarks the Council adduces three types of argument in support of its negative answer to Question 1 referred to the Court by the Finanzgericht.

In the first place the disputed Community acts cannot be challenged, even assuming the application of the second paragraph of Article 174 of the Treaty, as a result of an action in which a reference is made for a preliminary ruling on their validity, since those acts were perfectly in order to begin with, the situation complained of having been caused by the happening of events outside the Community and outside its control, namely the disarray in currency exchange rates. In this regard the Council refers to the judgment of 13 June 1972 in which the Court held that the validity of a Community act cannot be called in question because of events occurring subsequent to the adoption of that act which are such that the strict application of the act no longer meets the conditions of the market (Joined Cases 9 and 11/71 Cie d'Approvisionnement v Commission [1972] ECR 391, paragraph 39).

The second argument of the Council, supplementary to the first, suggests that in a situation of imbalance for which it is not to blame the Community is not obliged to redress the imbalance completely. It is not obliged to remedy this situation totally unless it has taken an arbitrary line, made an obvious mistake or misused its powers, which is clearly not the case here (cf. the judgments of 7 July 1976 in Case 7/76 IRCA v Amministrazione delle Finanze dello Stato [1976] ECR 1213, paragraph 13; of 28 January 1979 in Case 98/78 Racke v Hauptzollamt Mainz [1979] ECR 69, paragraph 5; and the judgments already cited on this point by the Commission).

Finally the Council claims that the difference in treatment, which was certainly a burden on the importer into Germany, does not constitute discrimination within the meaning of the Treaty or an unacceptable breach of the principle of equality because the products were not actually in competition. Indeed, the plaintiff in the main action did not allege that the imported goods were in direct competition with the same goods imported for transit into another Member State which are not subject to the levy.

If it is only a matter of difference in revenue between a trader in Germany who has paid the levy and a trader in another Member State who has not paid it, it is doubtful whether this situation can be treated as real discrimination within the meaning of the Treaty. It is more than probable that the importer has passed on the burden of the levy to the consumers. Moreover the Community cannot be blamed for not having totally rectified a discriminatory situation resulting from independent actions taken by Member States. In fact the margin of discrimination in question does not give rise to “discrimination capable of disturbing the market of the products in question” (judgment of 13 November 1978 in Case 87/78 Welding ν Hauptzollamt Hamburg-Waltershof [1978] ECR 2457, paragraph 6, closing words). The Council here refers to the rule de minimis non curat praetor.

Questions 2 and 3

As regards Question 2 Gedelfi basically observes that a preliminary ruling under Article 177 of the EEC Treaty that a provision of a regulation or its application is unlawful or contrary to the principle of equality is directly binding on national courts. It therefore enables those courts to rule in accordance with the preliminary ruling of the Court without there being any further need for the Council or the Commission or both of these institutions to repeal or amend the Community act concerned.

In regard to. Question 3 the plaintiff in the main action recalls that it argued before the Finanzgericht Hamburg that the charging of the levy was such a clear breach of Community law that it is not necessary for the Court to give a preliminary ruling. If the Court is nevertheless asked to give a ruling it must be assumed from the practice of the court so far regarding preliminary rulings that in its judgment it will indicate a way of resolving this particular case which complies with Community law.

However Gedelfi thinks that, whereas national courts are concerned, the answer to the question lies in Article 177 of the EEC Treaty in so far as it gives those courts the power not to apply illegal provisions of Community law in any particular case. Once the court applied to is convinced that there can be no doubt about the illegality of the provisions in question, it may take corrective measures without making any reference to the Court of Justice. Such is the case here.

In regard to Question 2 the Commission comments that the Finanzgericht Hamburg does not actually ask if the provisions in question are void because they cause financial loss in certain cases to an importer, but whether those provisions are void to the extent to which they cause that financial loss. In actual fact a simple declaration of invalidity would go far beyond the objective of abolishing inequalities of treatment. Such a decision would have the effect of taking away the entire legal basis for the charging of levies even in cases where a levy is fully justified. The Commission points out that there is a certain parallel here between this case and Joined Cases 124/77 and 20/77 Moulins Pont-à-Mousson ν Office Interprofessionnel des Céréales [1977] ECR 1795.

In the Commission's view Question 3 is not very clear. Assuming that it is to be understood as asking whether, even if the Court of Justice should not decide that there has been a breach of the principle of equality, the national authorities could for reasons of natural justice waive the charging of the levy in a particular case, then the question must be answered in the negative. In fact such an equitable measure “would alter the effect of the Community rules relating to the basis of assessment, the manner of imposition or the amount of the charge in question” and would therefore require a legal basis in Community law (cf. judgment of 28 June 1977 in Case 118/76 Balkan-Import-Export ν Hauptzollamt Berlin-Packhof [1977] ECR 1177). There is no such basis in this case.

In regard to Question 2 the Council thinks that if the Court declares Regulation No 516/77 to be void in regard to Article 2 thereof, the sums charged by the Hauptzollamt should be regarded as having been paid in error. The Finanzgericht could then go ahead without any new Community act and set aside the notice of corrective assessment challenged in the main action.

The Council regards Question 3 as having no point. However, in case the intention was to ask whether the national court must adopt an equitable solution, it refers to the judgment in Case 78/77 Lübrs ν Hauptzollamt-Jonas [1978] ECR 169, paragraph 17.

III — Oral procedure

At the sitting on 11 March 1980 oral arguments were presented on behalf on the plaintiff in the main action, represented by D. Ehle, Advocate at the Cologne Bar, the Council of the European Communities, represented for the purposes of the oral procedure by B. Schloh and B. Laloux, members of its Legal Department, acting as Agents, and the Commission of the European Communities, represented by its Legal Adviser, P. Gilsdorf, acting as Agent.

The Advocate General delivered his opinion at the sitting on 24 April 1980.

Decision

1. By an order of 20 July 1979 which was received at the Court on 21 August 1979 the Finanzgericht Hamburg referred three questions to the Court under Article 177 of the EEC Treaty on the validity and the interpretation of certain provisions of Council Regulation No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (Official Journal L 73, p. 1).

2. Those questions arose in the course of an action brought by a wholesaler against the dismissal by the Hauptzollamt (Principal Customs Office) Hamburg-Jonas of an objection. The objection was made against a notice of corrective assessment issued by the Hauptzollamt imposing a levy on the undertaking of DM 23672.59 in regard to the importation of four consignments of orange juice from Israel. When those goods were imported the customs office followed the declaration submitted by the undertaking importing the goods classifying them under subheading 20.07 Β II (a) 1 of the Common Customs Tariff (“fruit juices, unfermented, not containing spirit, of a specific gravity of 1.33 or less at 15 °C, of a value exceeding 30 units of account per kg net weight, orange juice”). By notice of corrective assessment the Hauptzollamt classified the goods under subheading 20.07 Β II (b) 1 (aa) (“fruit juices, unfermented, not containing spirit, of a specific gravity of 1.33 or less at 15 °C, of a value of 30 units of account or less per 100 kg net weight, orange juice, with an added sugar content exceeding 30 % by weight”). The rate of customs duty is the same for both subheadings but the importation of products classified under the latter subheading is in addition chargeable with a levy.

3. Regulation No 516/77, referred to above, governs the common organization of the market in products processed from fruit and vegetables which include certain fruit juices. Article 2 (2) of that regulation makes provision for the charging of a levy on various added sugars on the importation of products listed in Annex I to the regulation which includes inter alia the orange juice falling within subheading 20.07 B II (b) 1 (aa). The recitals in the preamble to the regulation explain that sugar has a direct and substantial effect on the cost price of certain processed products; and that the trading system for the latter must therefore be brought into line with that for sugar; and that provisions must therefore be adopted to ensure that a levy is charged on the sugar component incorporated in processed products under conditions similar to those operative under Council Regulation No 3330/74 of 19 December 1974 on the common organization of the market in sugar (Official Journal L 359, p. 1).

4. From the regulations quoted it can be seen that orange juice of a value exceeding 30 units of account per 100 kg and falling within subheading 20.07 B II (a) 1 are considered to have such a high natural sugar content that there is no reason to charge a levy on it in respect of added sugar.

5. By Article 13 (1) of Regulation No 516/77 the general rules for the interpretation of the Common Customs Tariff shall apply to the tariff classification of the products covered by that regulation. At the time of the importation which gave rise to the dispute in the main action those general rules, applicable by virtue of Council Regulation No 2500/77 of 7 November 1977 amending Regulation No 950/68 on the Common Customs Tariff (Official Journal L 289, p. 1) included in Section I.C general rules applicable both to nomenclature and to duties. Rule C.3 provided that the unit of account (u.a.), by reference to which the scope of certain subheadings is defined, has a value of 0.88867088 gramme of fine gold and that the exchange rate to be used in converting it into the currency of a Member State shall be that corresponding to the par value communicated to and recognized by the International Monetary Fund in respect of that currency.

6. On that basis the parties to the main action have agreed to take the amount of 30 units of account used as the line of demarcation between the two tariff subheadings in question as being equivalent to an amount of DM 109.80, one unit of account corresponding to DM 3.66.

7. In order to calculate the value of the imported orange juice, the Hauptzollamt in its notice of corrective assessment decided that the factors determining this value were expressed in American dollars and thought that the rate of exchange to be used had to be the latest selling rate recorded on the most representative exchange market or markets of the Federal Republic of Germany in accordance with Article 12 of Council Regulation No 803/68 of 27 June 1968 on the valuation of goods for customs purposes (Official Journal, English Special Edition 1968 (I), p. 170). At the time of the imports in question this rate was DM 2.10 to one American dollar. On that basis the value of the imported orange juice would be DM 103.64 per 100 kg net weight, in other words, less than the amount of DM 109.80 taken as being equivalent to 30 units of account.

8. The importer did not contend that this method of calculation was not in accordance with the Community provisions applicable. However it argued that if the importation had been made on the same date into another Member State, this method of calculation would have resulted in the orange juice being valued at more than 30 units of account per 100 kg net weight so that importation of the same goods into any other Member State would have been exempt from the levy.

9. After acknowledging that this was in fact the case the judgment making the reference found that the unequal taxation between the different Member States is a breach of the prohibition of discrimination contained in Article 40 of the Treaty and moreover a breach of the general principle of equality.

10. It was on the basis of this finding that the Finanzgericht referred the following questions to the Court:

“1) Is Article 2 of Council Regulation (EEC) No 516/77 of 14 March 1977 in conjunction with Annex I thereto and with Article 1 of Commission Regulation (EEC) No 2857/77 of 21 December 1977 invalid in so far as it provides for a levy on products falling within tariff subheading 20.07 Β II (b) 1 of the Common Customs Tariff the value of which, on the basis of the rate of exchange laid down in Rule 3 under Head C of the General Rules contained in Section I of Part I of the annex to Regulation (EEC) No 950/68 of the Council on the Common Customs Tariff in the version of Council Regulation (EEC) No 2500/77 of 7 November 1977, is 30 units of account or less per 100 kg net weight when the products are imported into the Federal Republic of Germany, if the value of the same products would be more than 30 units of account when imported into the other Member States, assuming the same import price on the basis of the dollar, so that it would not be necessary to charge a levy in the other Member States?

2) If the answer to Question 1 is in the affirmative: May the national authorities or courts themselves waive the charging of the levy on the ground of the declaration of invalidity made by the Court of Justice of the European Communities, or does this require an order by the competent legislature?

3) If the answer to Question 1 is in the negative: May the national authorities or courts in the case mentioned in Question 1 waive the charging of the levy on the ground that the imposition of a levy would lead to a violation of the principle of equality which would conflict with the precepts and values of the legislature?”

Question 1

11. The common organization of the market in products processed from fruit and vegetables involves, as the second recital in the preamble to Regulation No 516/77 states, setting up a single trading system at the frontiers of the Community in order to stabilize the Community market. A single trading system with non-member countries constitutes one of the fundamental objectives of the Common Market which is based, according to Article 3 (b) of the Treaty, on the establishment of a common customs tariff and of a common commercial policy towards third countries and which, by Article 38, extends to agriculture and trade in agricultural products. Under Article 39 (1) (c) of the Treaty stabilizing of markets is one of the objectives of the Common Agricultural Policy which must accompany the operation and development of the common market for agricultural products.

12. It follows that the establishment of a single trading system at the frontiers of the Community must be regarded as one of the essential aims of Regulation No 516/77. Therefore the provisions of that regulation and those needed to apply it must be interpreted with due regard for this aim.

13. Another factor in the interpretation of those provisions is that the levy provided for by Regulation No 516/77 is imposed on added sugar in order to bring the trading system for orange juice into line with that for sugar. The purpose of the provisions of that regulation is thus to impose a levy only on products processed with added sugar.

14. If therefore Regulation No 516/77 lays down a fixed limit of value of 30 units of account per 100 kg for orange juice above which goods imported into the Community escape from the application of the levy, and if it lays down criteria to convert this amount into national currency, it is only in order to facilitate the controls and customs checks carried out at the frontiers of the Community.

15. These two factors should assist the Finanzgericht in overcoming the problems of the kind referred to in its first question.

16. If under a single trading system with non-member countries the importation of orange juice into certain Member States does not give rise to the charging of the levy provided for by Regulation No 516/77 because those products are taken to contain no added sugar, those same products cannot be deemed to contain added sugar and consequently be taxed for this reason on their importation into other Member States.

17. This conclusion is all the more compelling since it does not allow fortuitous currency fluctuations to occasion a tariff classification by the customs authorities of a Member State which is different from the one applied by the customs authorities of other Member States.

18. In these circumstances the argument that some orange juices might fall within a certain subheading of the Common Customs Tariff and thereby become subject to the charging of a levy in certain Member States, and fall within another subheading exempting them from the charging of that levy in other Member States, is unfounded.

19. Consequently the answer to Question 1 should be that Article 2 of Regulation No 516/77 in conjunction with Annex I to that regulation should be interpreted as meaning that a levy is not chargeable in respect of added sugar on the importation of orange juice into a Member State if it is established that the same orange juice is exempt from the levy in other Member States.

20. It therefore follows that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Article 2 of Regulation No 516/77 as so interpreted.

Questions 2 and 3

21. In view of the answer given to Question 1 there is no need to examine Questions 2 and 3 which have lost their purpose.

Costs

22. The costs incurred by the Council and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since the proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT in answer to the questions referred to it by the Finanzgericht Hamburg by an order of that court of 20 July 1979, hereby rules:

1 Article 2 of Regulation No 516/77 in conjunction with Annex I to that regulation should be interpreted as meaning that a levy is not chargeable in respect of added sugar on the importation of orange juice into a Member State if it is established that the same orange juice is exempt from the levy in other Member States.

2 Consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Article 2 of Regulation No 516/77 as so interpreted.