Commission of the EEC v Grand Duchy of Luxembourg and Kingdom of Belgium. (Procedure ) [1962] EUECJ C-2/62 (14 December 1962)

[ Home ] [ Databases ] [ World Law ] [ Multidatabase Search ] [ Help ] [ Feedback ] [ DONATE ] Court of Justice of the European Communities (including Court of First Instance Decisions) You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Commission of the EEC v Grand Duchy of Luxembourg and Kingdom of Belgium. (Procedure ) [1962] EUECJ C-2/62 (14 December 1962) URL: https://www.bailii.org/eu/cases/EUECJ/1962/C262.html Cite as: [1962] EUECJ C-2/62 [ New search ] [ Help ] IMPORTANT LEGAL NOTICE - The source of this judgment is the web site of the Court of Justice of the European Communities . The information in this database has been provided free of charge and is subject to a Court of Justice of the European Communities disclaimer and a copyright notice . This electronic version is not authentic and is subject to amendment. 61962J0002 Judgment of the Court of 14 December 1962. Commission of the European Economic Community v Grand Duchy of Luxembourg and Kingdom of Belgium. Joined cases 2/62 and 3/62. European Court reports French edition 1962 Page 00813 Dutch edition 1962 Page 00853 German edition 1962 Page 00869 Italian edition 1962 Page 00793 English special edition 1962 Page 00425 Danish special edition 1954-1964 Page 00339 Greek special edition 1954-1964 Page 00799 Portuguese special edition 1962-1964 Page 00147 Spanish special edition 1961-1963 Page 00277 Swedish special edition I Page 00133 Finnish special edition I Page 00133 ++++ 1 . PROCEDURE - OBLIGATIONS OF THE MEMBER STATES OF THE EEC - FAILURE TO FULFIL THOSE OBLIGATIONS - POWERS OF THE COMMISSION - PROCEDURES FOR OBTAINING DEROGATIONS - NO EFFECT UPON THE EXERCISE OF THOSE POWERS ( EEC TREATY, ARTICLES 169, 226 ) 2 . OBLIGATIONS OF MEMBER STATES OF THE EEC - FAILURE TO FULFIL THOSE OBLIGATIONS - REQUEST FOR A POSTERIORI DEROGATION - EFFECT 3 . CUSTOMS DUTIES - ELIMINATION - PROHIBITION OF THE CREATION OF NEW DUTIES - STRICT NATURE OF THIS PROHIBITION ( EEC TREATY, ARTICLES 9, 12 ) 4 . CUSTOMS DUTIES - ELIMINATION - CHARGES HAVING EQUIVALENT EFFECT - CONCEPT ( EEC TREATY, ARTICLES 9, 12 ) 5 . POLICY OF THE EEC - COMMON RULES - TAX PROVISIONS - TAXATION WITHIN THE MEANING OF ARTICLE 95 OF THE EEC TREATY - SCOPE OF THAT ARTICLE 6 . COMMON MARKET - COMMUNITY PROCEDURES - UNILATERAL DECISIONS TO BE AVOIDED 1 . PROCEDURES FOR SEEKING A DEROGATION SUCH AS THOSE PROVIDED FOR BY ARTICLE 226 OF THE EEC TREATY, THE OUTCOME OF WHICH DEPENDS UPON THE VIEW TAKEN BY THE COMMISSION, ARE ENTIRELY DISTINCT IN BOTH THEIR NATURE AND EFFECTS FROM THE WARNING PROCEDURE AVAILABLE TO THE COMMISSION UNDER ARTICLE 169 AND CANNOT THEREFORE IN ANYWAY FRUSTRATE THE LATTER PROCEDURE . 2 . A REQUEST FOR DEROGATION FROM THE GENERAL RULES OF THE TREATY CANNOT HAVE THE EFFECT OF LEGALIZING UNILATERAL MEASURES WHICH CONFLICT WITH THOSE RULES AND CANNOT THEREFORE LEGALIZE RETROACTIVELY THE INITIAL INFRINGEMENT . 3 . IT FOLLOWS FROM THE CLARITY, CERTAINTY AND UNRESTRICTED SCOPE OF ARTICLES 9 AND 12, FROM THE GENERAL SCHEME OF THEIR PROVISIONS AND OF THE TREATY AS A WHOLE, THAT THE PROHIBITION OF NEW CUSTOMS DUTIES, LINKED WITH THE PRINCIPLES OF THE FREE MOVEMENT OF PRODUCTS, CONSTITUTES AN ESSENTIAL RULE AND THAT IN CONSEQUENCE ANY EXCEPTION, WHICH MOREOVER IS TO BE NARROWLY INTERPRETED, MUST BE CLEARLY STIPULATED . 4 . A CHARGE HAVING EQUIVALENT EFFECT WITHIN THE MEANING OF ARTICLES 9 AND 12 OF THE EEC TREATY, WHATEVER IT IS CALLED AND WHATEVER ITS MODE OF APPLICATION, MAY BE REGARDED AS A DUTY IMPOSED UNILATERALLY EITHER AT THE TIME OF IMPORTATION OR SUBSEQUENTLY, AND WHICH, IF IMPOSED SPECIFICALLY UPON A PRODUCT IMPORTED FROM A MEMBER STATE TO THE EXCLUSION OF A SIMILAR DOMESTIC PRODUCT, HAS, BY ALTERING ITS PRICE, THE SAME EFFECT ON THE FREE MOVEMENT OF PRODUCTS AS A CUSTOMS DUTY . THIS CONCEPT, FAR FROM BEING AN EXCEPTION TO THE GENERAL RULE PROHIBITING CUSTOMS DUTIES, IS ON THE CONTRARY NECESSARILY COMPLEMENTARY TO IT AND ENABLES IT TO BE MADE EFFECTIVE . THE CONCEPT OF A CHARGE HAVING EQUIVALENT EFFECT, INVARIABLY LINKED TO THAT OF 'CUSTOMS DUTIES', IS EVIDENCE OF A GENERAL INTENTION TO PROHIBIT NOT ONLY MEASURES WHICH OBVIOUSLY TAKE THE FORM OF THE CLASSIC CUSTOMS DUTY BUT ALSO ALL THOSE WHICH, PRESENTED UNDER OTHER NAMES OR INTRODUCED BY THE INDIRECT MEANS OF OTHER PROCEDURES, WOULD LEAD TO THE SAME DISCRIMINATORY OR PROTECTIVE RESULTS AS CUSTOMS DUTIES . 5 . ALTHOUGH THE FIRST PARAGRAPH OF ARTICLE 95 BY IMPLICATION ALLOWS 'TAXATION' ON AN IMPORTED PRODUCT, IT IS ONLY TO THE LIMITED EXTENT TO WHICH THE SAME TAXATION IS IMPOSED EQUALLY UPON SIMILAR DOMESTIC PRODUCTS . THE FIELD OF APPLICATION OF THIS ARTICLE CANNOT BE EXTENDED TO THE POINT OF ALLOWING COMPENSATION BETWEEN A TAX BURDEN CREATED FOR THE PURPOSE OF IMPOSITION UPON AN IMPORTED PRODUCT AND A TAX BURDEN OF A DIFFERENT NATURE, FOR EXAMPLE ECONOMIC, IMPOSED ON A SIMILAR DOMESTIC PRODUCT . 6 . TO RESOLVE THE DIFFICULTIES WHICH MIGHT ARISE IN A GIVEN ECONOMIC SECTOR, THE MEMBER STATES WISHED COMMUNITY PROCEDURES TO BE ESTABLISHED IN ORDER TO PREVENT UNILATERAL INTERVENTION BY NATIONAL ADMINISTRATIONS . IN CASES 2 AND 3/62 COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY, REPRESENTED BY HUBERT EHRING, LEGAL ADVISER OF THE EUROPEAN EXECUTIVES, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF HENRI MANZANARES, SECRETARY OF THE LEGAL SERVICE OF THE EUROPEAN EXECUTIVES, 2 PLACE DE METZ, APPLICANT V 1 . GRAND DUCHY OF LUXEMBOURG ( CASE 2/62 ) REPRESENTED BY JEAN RETTEL, LEGAL ADVISER ATTACHED TO THE MINISTRY OF FOREIGN AFFAIRS, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE MINISTRY OF FOREIGN AFFAIRS, 5 RUE NOTRE-DAME, AND 2 . KINGDOM OF BELGIUM ( CASE 3/62 ) REPRESENTED BY ITS DEPUTY PRIME MINISTER AND MINISTER OF FOREIGN AFFAIRS, HAVING APPOINTED AS ITS AGENT JACQUES KARELLE, DIRECTOR OF THE MINISTRY OF FOREIGN AFFAIRS AND FOREIGN TRADE, ASSISTED BY MARCEL VERSCHELDEN, ADVOCATE OF THE COUR D'APPEL OF BRUSSELS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE BELGIAN EMBASSY, 9 BOULEVARD DU PRINCE-HENRI, DEFENDANTS, APPLICATION FOR A RULING ON THE LEGALITY OF : - INCREASES IN THE SPECIAL DUTY LEVIED BY BELGIUM AND LUXEMBOURG ON THE ISSUE OF IMPORT LICENCES FOR GINGERBREAD; AND - THE EXTENSION OF THAT DUTY TO PRODUCTS SIMILAR GINGERBREAD UNDER HEADING N . 19.08 OF THE COMMON CUSTOMS TARIFF; WHICH IS CONTESTED ON THE GROUND THAT THEY WERE INTRODUCED AFTER 1 JANUARY 1958; P . 429 ON ADMISSIBILITY IN CLAIMING THE APPLICATION TO BE INADMISSIBLE, THE DEFENDANTS SUBMIT THAT THE COMMISSION HAS PREVENTED THE RECTIFICATION OF THE SITUATION UNDER CONSIDERATION BY IMPROPERLY DEMANDING THE SUSPENSION OF THE MEASURES CRITICIZED BEFORE DECIDING UPON THE REQUESTS FOR DEROGATION PUT FORWARD BY THEM BOTH UNDER ARTICLE 226 OF THE TREATY AND UNDER A REGULATION ADOPTED BY THE COUNCIL OF MINISTERS ON 4 APRIL 1962, PURSUANT TO ARTICLE 235 . BY 'ABUSING ITS POWERS AND BY ADOPTING AN EXCESSIVELY LEGALISTIC ATTITUDE' AND BY FAILING TO DECIDE AS A MATTER OF URGENCY UPON THE REQUESTS, AS IT WAS OBLIGED TO DO, THE COMMISSION HAS IN THE DEFENDANTS' SUBMISSION, LOST THE RIGHT TO TAKE PROCEEDINGS AGAINST THE DEFENDANTS FOR INFRINGEMENT OF THE TREATY . P . 430 AS THE COMMISSION IS OBLIGED BY ARTICLE 155 TO ENSURE THAT THE PROVISIONS OF THE TREATY ARE APPLIED, IT CANNOT BE DEPRIVED OF THE RIGHT TO EXERCISE AN ESSENTIAL POWER WHICH IT HOLDS UNDER ARTICLE 169 TO ENSURE THAT THE TREATY IS OBSERVED . IF IT WERE POSSIBLE TO PREVENT THE APPLICATION OF ARTICLE 169 BY A REQUEST FOR RECTIFICATION, THAT ARTICLE WOULD LOSE ALL ITS EFFECT . A REQUEST FOR DEROGATION FROM THE GENERAL RULES OF THE TREATY - IN THIS CASE, MOREOVER, MADE AT A VERY LATE DATE - CANNOT HAVE THE EFFECT OF LEGALIZING UNILATERAL MEASURES WHICH CONFLICT WITH THOSE RULES AND CANNOT THEREFORE LEGALIZE RETROACTIVELY THE INITIAL INFRINGEMENT . THE PROCEDURES FOR SEEKING A DEROGATION USED IN THE PRESENT CASE, THE OUTCOME OF WHICH DEPENDED UPON THE VIEW TAKEN BY THE COMMISSION, ARE ENTIRELY DISTINCT BOTH IN THEIR NATURE AND EFFECTS FROM THE WARNING PROCEDURE AVAILABLE TO THE COMMISSION UNDER ARTICLE 169 : THEY CANNOT IN ANY WAY FRUSTRATE THE LATTER PROCEDURE . THERE IS NO NEED TO CONSIDER WHETHER A POSSIBLE ABUSE BY THE COMMISSION OF ITS RIGHTS CAN DEPRIVE IT OF ALL THE METHODS AVAILABLE TO IT UNDER ARTICLE 169, AS IT SUFFICES TO STATE THAT IN THIS CASE NO PROOF OF SUCH AN ABUSE HAS BEEN GIVEN OR TENDERED . IT EMERGES FROM THE ORAL PROCEDURE, MOREOVER, THAT THE DEFENDANTS NEGLECTED TO FURNISH THE COMMISSION WITH THE NECESSARY DETAILS TO ENABLE IT TO DECIDE UPON THEIR REQUESTS . WHAT IS MORE, ANY WRONGFUL ACT OR DEFAULT ON THE PART OF THE COMMISSION - WHICH WOULD HAVE TO BE DECIDED UPON IN AN ACTION ESPECIALLY BROUGHT ON THIS POINT - WOULD NOT IN ANY WAY AFFECT THE PROCEEDINGS FOR INFRINGEMENT OF THE TREATY BROUGHT IN RESPECT OF DECISIONS WHICH STILL SUBSIST AT PRESENT AND THE LEGALITY OF WHICH THE COURT IS BOUND TO EXAMINE . THE APPLICATIONS MUST THEREFORE BE DECLARED ADMISSIBLE . P . 431 ON THE SUBSTANCE OF THE CASE THE APPLICATIONS ARE BROUGHT FOR THE PURPOSE OF OBTAINING A DECLARATION OF ILLEGALITY IN RESPECT OF THE INCREASE OF THE SPECIAL IMPORT DUTY ON GINGERBREAD IMPOSED AFTER THE TREATY ENTERED INTO FORCE, AND OF THE EXTENSION OF THAT DUTY TO OTHER SIMILAR PRODUCTS CONSIDERED AS A CHARGE HAVING EQUIVALENT EFFECT TO A CUSTOMS DUTY PROHIBITED BY ARTICLES 9 AND 12 . 1 . A CHARGE HAVING EQUIVALENT EFFECT TO A CUSTOMS DUTY ACCORDING TO THE TERMS OF ARTICLE 9, THE COMMUNITY IS BASED ON A CUSTOMS UNION FOUNDED ON THE PROHIBITION OF CUSTOMS DUTIES AND OF 'ALL CHARGES HAVING EQUIVALENT EFFECT '. BY ARTICLE 12 IT IS PROHIBITED TO INTRODUCE ANY 'NEW CUSTOMS DUTIES ON IMPORTS.... OR CHARGES HAVING EQUIVALENT EFFECT' AND TO INCREASE THOSE ALREADY IN FORCE . THE POSITION OF THESE ARTICLES TOWARDS THE BEGINNING OF THAT PART OF THE TREATY DEALING WITH THE 'FOUNDATIONS OF THE COMMUNITY' - ARTICLE 9 BEING PLACED AT THE BEGINNING OF THE TITLE RELATING TO 'FREE MOVEMENT OF GOODS', AND ARTICLE 12 AT THE BEGINNING OF THE SECTION DEALING WITH THE 'ELIMINATION OF CUSTOMS DUTIES' - IS SUFFICIENT TO EMPHASIZE THE ESSENTIAL NATURE OF THE PROHIBITIONS WHICH THEY IMPOSE . THE IMPORTANCE OF THESE PROHIBITIONS IS SUCH THAT, IN ORDER TO PREVENT THEIR EVASION BY DIFFERENT CUSTOMS OR FISCAL PRACTICES, THE TREATY SOUGHT TO FORESTALL ANY POSSIBLE BREAKDOWN IN THEIR APPLICATION . THUS IT IS SPECIFIED ( ARTICLE 17 ) THAT THE PROHIBITIONS CONTAINED IN ARTICLE 9 SHALL BE APPLIED EVEN IF THE CUSTOMS DUTIES ARE FISCAL IN NATURE . ARTICLE 95, WHICH IS TO BE FOUND BOTH IN THAT PART OF THE TREATY DEALING WITH THE 'POLICY OF THE COMMUNITY' AND IN THE CHAPTER RELATING TO 'TAX PROVISIONS', SEEKS TO FILL IN ANY LOOP-HOLE WHICH CERTAIN TAXATION PROCEDURES MIGHT FIND IN THE PRESCRIBED PROHIBITIONS . THIS CONCERN IS TAKEN SO FAR AS TO FORBID A STATE EITHER TO IMPOSE IN ANY MANNER HIGHER TAXATION ON THE PRODUCTS OF OTHER MEMBER STATES THAN ON ITS OWN OR TO IMPOSE ON THE PRODUCTS OF THOSE STATES ANY INTERNAL TAXATION OF SUCH A NATURE AS TO AFFORD INDIRECT 'PROTECTION' TO ITS DOMESTIC PRODUCTS . P . 432 IT FOLLOWS, THEN, FROM THE CLARITY, CERTAINTY AND UNRESTRICTED SCOPE OF ARTICLES 9 AND 12, FROM THE GENERAL SCHEME OF THEIR PROVISIONS AND OF THE TREATY AS A WHOLE, THAT THE PROHIBITION OF NEW CUSTOMS DUTIES, LINKED WITH THE PRINCIPLES OF THE FREE MOVEMENT OF PRODUCTS, CONSTITUTES AN ESSENTIAL RULE AND THAT IN CONSEQUENCE ANY EXCEPTION, WHICH MOREOVER IS TO BE NARROWLY INTERPRETED, MUST BE CLEARLY STIPULATED . THE CONCEPT OF 'A CHARGE HAVING EQUIVALENT EFFECT' TO A CUSTOMS DUTY, FAR FROM BEING AN EXCEPTION TO THE GENERAL RULE PROHIBITING CUSTOMS DUTIES, IS ON THE CONTRARY NECESSARILY COMPLEMENTARY TO IT AND ENABLES THAT PROHIBITION TO BE MADE EFFECTIVE . THIS EXPRESSION, INVARIABLY LINKED TO THAT OF 'CUSTOMS DUTIES' IS EVIDENCE OF A GENERAL INTENTION TO PROHIBIT NOT ONLY MEASURES WHICH OBVIOUSLY TAKE THE FORM OF THE CLASSIC CUSTOMS DUTY BUT ALSO ALL THOSE WHICH, PRESENTED UNDER OTHER NAMES OR INTRODUCED BY THE INDIRECT MEANS OF OTHER PROCEDURES, WOULD LEAD TO THE SAME DISCRIMINATORY OR PROTECTIVE RESULTS AS CUSTOMS DUTIES . IN ORDER TO SEE WHETHER A CHARGE HAS AN EQUIVALENT EFFECT TO A CUSTOMS DUTY, IT IS IMPORTANT TO CONSIDER THIS EFFECT IN CONNEXION WITH THE OBJECTIVES OF THE TREATY, NOTABLY IN THAT PART, TITLE AND CHAPTER CONTAINING ARTICLES 9 AND 12, THAT IS IN RELATION TO THE FREE MOVEMENT OF GOODS, AND STILL MORE GENERALLY THE OBJECTIVES OF ARTICLE 3 WHICH ARE AIMED AT PREVENTING THE DISTORTION OF COMPETITION . IT IS, THEREFORE, OF LITTLE IMPORTANCE TO KNOW WHETHER ALL THE EFFECTS OF CUSTOMS DUTIES ARE PRESENT AT THE SAME TIME, OR WHETHER IT IS MERELY A QUESTION OF ONE ONLY, OR AGAIN WHETHER SIDE BY SIDE WITH THESE EFFECTS OTHER PRINCIPAL OR ANCILLARY OBJECTIVES WERE INTENDED, SINCE THE CHARGE JEOPARDIZES THE OBJECTIVES OF THE TREATY AND IS THE RESULT NOT OF A COMMUNITY PROCEDURE BUT OF A UNILATERAL DECISION . IT FOLLOWS FROM ALL THESE FACTORS THAT A CHARGE HAVING EQUIVALENT EFFECT WITHIN THE MEANING OF ARTICLES 9 AND 12, WHATEVER IT IS CALLED AND WHATEVER ITS MODE OF APPLICATION, MAY BE REGARDED AS A DUTY IMPOSED UNILATERALLY WITHER AT THE TIME OF IMPORTATION OR SUBSEQUENTLY, AND WHICH, IF IMPOSED SPECIFICALLY UPON A PRODUCT IMPORTED FROM A MEMBER STATE TO THE EXCLUSION OF A SIMILAR DOMESTIC PRODUCT, HAS, BY ALTERING ITS PRICE, THE SAME EFFECT UPON THE FREE MOVEMENT OF PRODUCTS AS A CUSTOMS DUTY . 2 . APPLICATION TO THE PRESENT CASE THE DUTY ON GINGERBREAD, INTRODUCED IN BELGIUM BY ROYAL DECREE OF 16 AUGUST 1957 AND IN LUXEMBOURG BY GRAND DUCAL DECREE OF 20 AUGUST 1957, IS DESCRIBED AS 'A SPECIAL IMPORT DUTY ... LEVIED ON THE ISSUE OF IMPORT LICENCES '. THE LEGALITY OF THIS DUTY, IMPOSED AFTER THE SIGNING OF THE TREATY BUT BEFORE IT ENTERED INTO FORCE, CANNOT BE DISPUTED . P . 433 THE SAME CANNOT BE SAID, HOWEVER, OF THE INCREASES IN THAT DUTY SUBSEQUENT TO 1 JANUARY 1958 OR OF THE EXTENSION OF THE SAID DUTY, BY THE RESPECTIVE DECREES OF 24 AND 27 FEBRUARY 1960 PASSED IN THE TWO COUNTRIES, TO PRODUCTS SIMILAR TO GINGERBREAD, COMING UNDER HEADING N . 19.08 OF THE COMMON CUSTOMS TARIFF . DETERMINED UNILATERALLY AFTER THE TREATY ENTERED INTO FORCE, THESE INCREASES IN A 'SPECIAL DUTY', LEVIED AT THE TIME AND ON THE OCCASION OF THE IMPORTATION OF THE PRODUCTS IN QUESTION AND IMPOSED SOLELY ON THESE PRODUCTS BY REASON OF THEIR IMPORTATION, RAISE A PRESUMPTION OF THE EXISTENCE OF DISCRIMINATION AND PROTECTION CONTRARY TO THE FUNDAMENTAL PRINCIPLE OF THE FREE MOVEMENT OF PRODUCTS WHICH WOULD BE DESTROYED BY THE GENERAL APPLICATION OF SUCH PRACTICES . THE DEFENDANTS REBUT THIS PRESUMPTION - BY ASSERTING THAT THE FIRST PARAGRAPH OF ARTICLE 95 OF THE TREATY PERMITS THE INSTITUTION OF SUCH A DUTY IF IT CONSTITUTES THE COUNTERPART OF INTERNAL CHARGES AFFECTING DOMESTIC PRODUCTS TO MEET THE NEEDS OF AN INDEPENDENT MARKETING POLICY . THEY REGARD THE DUTY IN DISPUTE AS THE COROLLARY OF THE SUPPORTED PRICE ESTABLISHED FOR THE BENEFIT OF NATIONAL PRODUCERS OF RYE UNDER THE DEROGATIONS CONTAINED IN THE AGRICULTURAL PROVISIONS OF THE TREATY . HOWEVER, THE APPLICATION OF ARTICLE 95, WITH WHICH CHAPTER 2 OF PART THREE OF THE TREATY DEALING WITH 'TAX PROVISIONS' BEGINS, CANNOT BE EXTENDED TO EVERY KIND OF CHARGE . IN THE PRESENT CASE THE DUTY IN DISPUTE DOES NOT APPEAR, EITHER BY ITS FORM OR BY ITS CLEARLY PROCLAIMED ECONOMIC PURPOSE, TO BE A TAX PROVISION CAPABLE OF COMING WITHIN THE SCOPE OF ARTICLE 95 . MOREOVER, THE FIELD OF APPLICATION OF THIS ARTICLE CANNOT BE EXTENDED TO THE POINT OF ALLOWING COMPENSATION BETWEEN A TAX BURDEN CREATED FOR THE PURPOSE OF IMPOSITION UPON AN IMPORTED PRODUCT AND A TAX BURDEN OF A DIFFERENT NATURE, FOR EXAMPLE ECONOMIC, IMPOSED ON A SIMILAR DOMESTIC PRODUCT . IF SUCH COMPENSATION WERE PERMITTED, EVERY STATE, BY VIRTUE OF ITS SOVEREIGNTY IN ITS OWN DOMESTIC AFFAIRS, COULD IN THIS MANNER COMPENSATE THE WIDEST VARIETY OF TAX BURDENS IMPOSED ON ANY PRODUCT AND THIS PRACTICE WOULD OPEN AN IRREPARABLE BREACH IN THE PRINCIPLES OF THE TREATY . P . 434 ALTHOUGH THE FIRST PARAGRAPH OF ARTICLE 95 BY IMPLICATION ALLOWS 'TAXATION' ON AN IMPORTED PRODUCT, IT IS ONLY TO THE LIMITED EXTENT TO WHICH THE SAME TAXATION IS IMPOSED EQUALLY UPON SIMILAR DOMESTIC PRODUCTS . MOREOVER, IT MUST BE STATED THAT IN THE PRESENT CASE THE DUTY IN DISPUTE HAS AS ITS OBJECT NOT THE EQUALIZATION OF TAXES IMPOSING UNEQUAL BURDENS ON DOMESTIC PRODUCTS AND IMPORTED PRODUCTS BUT OF THE VERY PRICES OF THESE PRODUCTS . THE DEFENDANTS HAVE IN EFFECT ASSERTED THAT THE CHARGE IN DISPUTE WAS INTENDED TO 'EQUATE THE PRICE OF THE FOREIGN PRODUCT WITH THE PRICE OF THE BELGIAN PRODUCT' ( STATEMENT OF DEFENCE, P . 19 ). THEY HAVE EVEN EXPRESSED DOUBT WHETHER IT IS 'COMPATIBLE WITH THE GENERAL SCHEME OF THE TREATY THAT WITHIN THE COMMON MARKET THE PRODUCERS OF ONE COUNTRY MAY ACQUIRE RAW MATERIALS AT A CHEAPER PRICE THAN THE PRODUCERS OF ANOTHER MEMBER STATE' ( REJOINDER, P . 29 ). THIS ARGUMENT IGNORES THE PRINCIPLE ACCORDING TO WHICH THE ACTIVITIES OF THE COMMUNITY SHALL INCLUDE THE INSTITUTION OF A SYSTEM ENSURING THAT COMPETITION IN THE COMMON MARKET IS NOT DISTORTED ( ARTICLE 3 ( F ) ). TO ACCEPT THE ARGUMENT OF THE DEFENDANTS WOULD LEAD, THEREFORE, TO AN ABSURD SITUATION WHICH WOULD BE THE EXACT OPPOSITE OF THAT INTENDED BY THE TREATY . IT FOLLOWS FROM ARTICLE 38 ( 2 ) THAT THE DEROGATIONS ALLOWED IN THE CASE OF AGRICULTURE FROM THE RULES LAID DOWN FOR THE ESTABLISHMENT OF THE COMMON MARKET CONSTITUTE MEASURES WHICH ARE EXCEPTIONAL IN NATURE AND MUST BE NARROWLY INTERPRETED . THEY CANNOT, THEREFORE, BE EXTENDED OTHERWISE THAN BY MAKING THE EXCEPTION THE RULE AND THEREFORE ALLOWING A LARGE PROPORTION OF PROCESSED PRODUCTS TO ESCAPE THE APPLICATION OF THE TREATY . THE LIST CONTAINED IN ANNEX II MUST CONSEQUENTLY BE REGARDED AS BEING RESTRICTIVE, AND THIS IS CONFIRMED BY THE SECOND SENTENCE OF ARTICLE 38 ( 3 ). GINGERBREAD DOES NOT APPEAR IN THE PRODUCTS ENUMERATED IN ANNEX II AND HAS NOT BEEN ADDED TO THE LIST UNDER THE COMMUNITY PROCEDURE LAID DOWN BY ARTICLE 38 ( 3 ). TO RESOLVE THE DIFFICULTIES WHICH MIGHT ARISE IN A GIVEN ECONOMIC SECTOR, THE MEMBER STATES WISHED COMMUNITY PROCEDURES TO BE ESTABLISHED IN ORDER TO PREVENT UNILATERAL INTERVENTION BY NATIONAL ADMINISTRATIONS . IN THE PRESENT CASE, HOWEVER, THE INCREASES AND EXTENSION OF THE DUTY IN DISPUTE WERE DETERMINED UNILATERALLY . IT FOLLOWS FROM ALL THESE FACTORS THAT THE PRESUMPTION OF DISCRIMINATION AND PROTECTION RAISED AGAINST THE DEFENDANTS HAS NOT BEEN REBUTTED . MOREOVER, UNTIL THEIR REQUEST OF 8 NOVEMBER 1962 FOR THE REOPENING OF THE ORAL PROCEDURE THEY DID NOT DISPUTE THAT THEIR MARKET POLICY 'RESULTS INDIRECTLY IN PROTECTION' ( ORAL ARGUMENTS ON BEHALF OF BELGIUM, P . 21 ), THIS BEING, ACCORDING TO THEM, ONLY A SIDE - EFFECT AND NOT THE ESSENTIAL EFFECT OF THE DUTY IN DISPUTE . P . 435 THE SAID APPLICATION OF 8 NOVEMBER 1962, WHICH CONTRADICTS THIS ASSERTION, RECOGNIZES HOWEVER THAT THE SPECIAL DUTIES IN DISPUTE 'CERTAINLY CONSTITUTE A HINDRANCE TO THE FREE MOVEMENT OF GOODS '. FINALLY, IN ITS LETTER OF 27 NOVEMBER 1961, THE BELGIAN GOVERNMENT, WHICH IN ITS REJOINDER ( P . 13 ) SUBMITS THAT THE COMMISSION 'WAS THE CAUSE OF THE PERPETUATION OF THE INFRINGEMENT WHICH THE DEFENDANT HAD SHOWN THAT IT WAS PREPARED TO TERMINATE', DID NOT DENY THAT 'A UNILATERAL MEASURE IS OF ITS VERY NATURE OPEN TO CRITICISM '. FROM ALL THESE CONSIDERATIONS IT MUST BE CONCLUDED THAT THE 'SPECIAL IMPORT DUTY' ON GINGERBREAD, INCREASED AND EXTENDED IN BELGIUM AND LUXEMBOURG AFTER THE TREATY ENTERED INTO FORCE, CONTAINS ALL THE ELEMENTS OF A CHARGE HAVING EQUIVALENT EFFECT TO A CUSTOMS DUTY REFERRED TO IN ARTICLES 9 AND 12 . IT MUST THEREFORE BE DECLARED AND ADJUDGED THAT THE DECISIONS TO INCREASE OR EXTEND THIS DUTY, TAKEN AFTER 1 JANUARY 1958, CONSTITUTED INFRINGEMENTS OF THE TREATY . THE DEFENDANTS, HAVING FAILED IN ALL THEIR SUBMISSIONS, MUST, BY VIRTUE OF ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE, BE ORDERED TO BEAR THE COSTS . THE COURT HEREBY 1 . RULES THAT APPLICATIONS 2 AND 3/62 BROUGHT BY THE COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY AGAINST THE GRAND DUCHY OF LUXEMBOURG AND THE KINGDOM OF BELGIUM ARE ADMISSIBLE AND WELL FOUNDED; 2 . DECLARES THAT THE INCREASES IN THE SPECIAL DUTY DETERMINED BY LUXEMBOURG AND BELGIUM ON THE ISSUE OF IMPORT LICENCES FOR GINGERBREAD, AND THE EXTENSION OF THAT DUTY TO PRODUCTS SIMILAR TO GINGERBREAD COMING UNDER HEADING N . 19.08 OF THE COMMON CUSTOMS TARIFF, INTRODUCED AFTER 1 JANUARY 1958, ARE CONTRARY TO THE TREATY; 3 . ORDERS THE DEFENDANTS TO PAY THE COSTS . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII URL: https://www.bailii.org/eu/cases/EUECJ/1962/C262.html