Sanders Adour SNC and Guyomarc'h Orthez Nutrition Animale SA v Directeur des Services Fiscaux des Pyrenees-Atlantiques. (Agriculture) [1992] EUECJ C-149/91 (11 June 1992)

Judgment 1 By two judgments of 28 May 1991, received at the Court on 3 June 1990, the Tribunal de Grande Instance (Regional Court), Pau, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Articles 92 and 95 of the EEC Treaty, and of the rules of the Common Agricultural Policy with regard to the levying of a parafiscal charge on cereals. 2 Those questions were raised in proceedings between Sanders Adour Snc ("Sanders") and Guyomarc' h Orthez Nutrition Animale SA ("Guyomarc' h") and the Director of Fiscal Services of the Pyrénées-Atlantiques concerning claims for the recovery of sums received by way of a parafiscal charge on cereals introduced by Decree No 53-975 of 30 September 1953 on the organization of the market in cereals and the Office National Interprofessionnel des Céréales (National Cereals Trades Board ° "ONIC") (Journal Officiel de la République Française (Official Journal of the French Republic ° "JORF") of 1 October 1953, p. 8635). 3 That charge, which has since been extended and amended on several occasions, is governed at present by Decree No 87/676 of 17 August 1987 on the parafiscal storage charge in the cereals sector (JORF of 19 August 1987, p. 9520), and its levying is authorized each year by the Loi des Finances (Finance Law). The rules implementing that decree were laid down by order of 14 March 1988 on the storage charge and the charge on imports and exports of cereal products intended for the supplementary budget for agricultural social security benefits. 4 Under Article 1 of Decree No 87-676, the charge in question is to be levied on approved collectors and cereal producers in respect of all quantities of common wheat, durum wheat, barley and maize sold or utilized, and also on importers in respect of the quantities of such cereals imported. The charge is borne entirely by the users and its proceeds are allocated to ONIC. Exported cereals are exempt from it, whilst the charge is reimbursed on cereals utilized for the manufacture of products on which the production refunds provided for in Article 11 of Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the markets in cereals (OJ 1975 L 281, p. 1) are payable. 5 Products derived from cereals and processed products and goods not coming within Annex II of the Treaty derived from cereals subject to the charge give rise on importation or exportation to the levying or reimbursement respectively of the charge having regard to the corresponding quantities of cereals provided for in the Community regulations. 6 The tax was fixed at the rate of 3 FF per tonne of barley, wheat or maize at the time of the facts underlying the main proceedings. 7 Sanders and Guyomarc' h manufacture feeding stuffs from cereals. Since they had to pay the charge, which they regard as contrary to Community law, upon purchasing such cereals, they applied for it to be repaid for the period from 1 July 1986 to 31 May 1988. Receiving no reply, they brought proceedings against the tax authorities before the Tribunal de Grande Instance, Pau, in order to contest the tacit decision rejecting their complaint and to obtain restitution of the amounts paid. 8 The national court decided to stay the proceedings pending a preliminary ruling by the Court on the following questions: Can the storage charge established by Decree No 82-732 of 23 August 1982 and Decree No 87-676 of 17 August 1987 be regarded as a charge having an effect equivalent to a customs duty or alternatively as discriminatory internal taxation within the meaning of Article 95 of the Treaty establishing the EEC? In view of the fact that it is used to cover national expenditure on storage, can it be considered contrary to the rules of the Common Agricultural Policy? In view of the purpose for which it is used and the system of reimbursement, can it be regarded as a State aid prohibited by Article 92 of the same Treaty? 9 Reference is made to the Report for the Hearing for a fuller account of the facts, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. Jurisdiction of the Court 10 As a preliminary matter, it should be recalled that the Court has consistently held that, in the context of Article 177 of the EEC Treaty, it does not have jurisdiction to rule on the compatibility with Community law of a rule of national law. The Court may, however, extract from the wording of the questions formulated by the national court, and having regard to the facts stated by the latter, those elements which concern the interpretation of Community law for the purpose of enabling that court to resolve the legal problems before it (see, in particular, Case 14/86 Pretore di Salò v Persons Unknown [1987] ECR 2545 ). Second question 11 With regard to the second question, it should also be recalled that, in reply to a question submitted for a preliminary ruling by the Tribunal de Grande Instance, Morlaix, concerning the same parafiscal charge as that at issue in the main proceedings, the Court, in Case C-235/90 Aliments Morvan v Directeur des Services Fiscaux du Finistère [1991] ECR I-5419 , has already given a ruling on the interpretation of the rules of the Common Agricultural Policy. It held that: "Community law, and in particular the machinery of the common agricultural policy laid down for the cereals sector in, inter alia, Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals, precludes a Member State from levying a charge on a limited number of agricultural products over a prolonged period where that charge is likely to encourage economic agents to alter the structure of their production or consumption. It is for the national court to determine whether the charge at issue in a dispute before it has had such effects." 12 Since the factual and legal basis of the present case is identical to that in the Morvan case, the same reply should be given to the national court' s second question. First question 13 In its first question the national court seeks elucidation of the concept of charges having equivalent effect to customs duties mentioned in Article 12 et seq. of the EEC Treaty and of discriminatory internal taxation referred to in Article 95 of the Treaty, in relation to the parafiscal charge on imported products in question in order to assess its compatibility with those provisions. 14 It is settled law (see Joined Cases C-78/90 to C-83/90 Compagnie Commerciale de l' Ouest and Others v Receveur Principal des Douanes de La-Pallice Port [1992] ECR I-1847 ) that the provisions relating to charges having equivalent effect and those relating to discriminatory internal taxation cannot be applied together, so that under the system of the Treaty the same imposition cannot belong to both categories at the same time. 15 As far as charges having equivalent effect are concerned, the Court has on many occasions stated (see the judgment in Compagnie Commerciale de l' Ouest) that the prohibition in question covers all charges levied at the time of, or by reason of, importation, which are imposed specifically on an imported product but not on a similar domestic product, and that even pecuniary charges intended to finance the activities of an agency governed by public law can constitute charges having equivalent effect. 16 The concept of a charge having equivalent effect also includes the situation where a charge imposed on imported and domestic products alike is reimbursed in the latter instance, for example, when the product is processed. That is the case of a charge which is reimbursed for cereals used in the manufacture of domestic derived products, whereas no reimbursement is provided for in the case of cereals contained in imported derived products and ultimately the fiscal charge is only imposed on the latter. 17 However, a pecuniary charge escapes classification as a charge having equivalent effect if it is levied on account of inspections carried out in order to comply with obligations laid down by Community law (see Case 46/76 Bauhuis v Netherlands State [1977] ECR 5), or if it represents payment for a service actually rendered to the importer of a sum in proportion to that service (see Case 158/82 Commission v Denmark [1983] ECR 3573), or again if it forms part of a general system of internal dues applied systematically in accordance with the same criteria to both domestic and imported products (see the judgment in Commission v Denmark). However, this will only apply if the charge is imposed on both categories of product at the same marketing stage and the chargeable event giving rise to the duty must also be identical in the case of both products (see Case 132/78 Denkavit v France [1979] ECR 1923 ). 18 As to the requirement that the chargeable events be identical, no difference may be discerned in the present case in the fact that the charge is levied on an imported product at the time of importation and on the domestic product when it is sold or used, for in actual economic terms the marketing stage is the same since both operations are carried out with a view to utilization of the product. 19 In the case of a general system of internal dues applied systematically in accordance with the same criteria to both domestic and imported products, Article 95 applies. It prohibits a Member State from imposing, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products, or of such a nature as to protect other domestic products. The criterion for the application of Article 95 is consequently whether such taxation is discriminatory or protective. 20 Moreover, in accordance with settled case-law, it may be necessary to take account of the intended purpose of the revenue from the charge, both in the context of Article 12 et seq. and in that of Article 95 of the Treaty. If the revenue is intended exclusively to support activities which specifically benefit taxed domestic products and fully offset the burden borne by them, such taxation nevertheless constitutes a charge having equivalent effect to a customs duty, contrary to Articles 12 et seq. of the Treaty. On the other hand, if the advantages stemming from the use of the proceeds of the charge only partly offset the burden borne by domestic products, the charge in question is subject to Article 95 of the Treaty. In the latter case, the charge is incompatible with that article to the extent to which it discriminates against imported products by partially offsetting the burden borne by the taxed domestic product (see the judgment in Compagnie Commerciale de l' Ouest). 21 In a case such as this, the fact that the products in question may be delivered into intervention does not amount to an advantage under the terms of that case law, for that right is derived directly from Community law. It is for the national court to examine whether there are any other benefits financed by the revenue from the charge in question, having regard to the rules applicable to them. 22 In the light of the foregoing, the reply to be given to the national court' s first question should be that a parafiscal charge constitutes a charge having equivalent effect to a customs duty prohibited by Article 12 of the EEC Treaty when the charge is definitively levied on the importation of certain products, whereas it is reimbursed where those products are manufactured on the national territory, or when the revenue from it is entirely used for the benefit of domestic products only, thereby fully offsetting the charge imposed on those products. If that revenue is allocated in part to those benefits, thus offsetting only partly the burden borne by domestic products, the charge constitutes discriminatory taxation prohibited by Article 95 of the Treaty. Third question 23 By its third question the national court is asking whether a charge such as that in issue is compatible with the Treaty provisions concerning State aid. 24 Although the charge in question does in certain respects come within the scope either of Article 12 or of Article 95 of the Treaty, the use to which the revenue from it is put, or the machinery for its reimbursement, may nevertheless constitute a State aid, possibly incompatible with the common market, if the conditions for the application of Article 92 of the Treaty, as interpreted by the Court in previous decisions, are met. 25 However, the Court has consistently held that the incompatibility of State aid with the common market is neither absolute nor unconditional. The intention of the Treaty, in providing through Article 93 for aid to be kept under constant review and supervised by the Commission, is that the finding that an aid may be incompatible with the common market is to be determined, subject to review by the Court, by means of an appropriate procedure which it is the Commission' s responsibility to set in motion. Individuals cannot therefore simply, on the basis of Article 92 alone, challenge the compatibility of aid with Community law before the national courts or ask them to decide as the main or a subsidiary issue on any incompatibility (see, most recently, the judgment in Compagnie Commerciale de l' Ouest). 26 Nevertheless, it is for the national courts to uphold the rights of the persons concerned in the event of a possible breach by the national authorities of the prohibition on putting aids into effect in the last sentence of Article 93(3) of the Treaty which has direct effect. Where such a breach is invoked by individuals who may rely thereon and established by the national courts, the latter must take all the consequential measures under national law as regards both the validity of decisions giving effect to aid measures and the recovery of amounts of financial support granted. When national courts take a decision in this connection they do not decide on the compatibility of the aid measures with the common market, the final assessment of which is the exclusive responsibility of the Commission, subject to review by the Court of Justice (see Case C-354/90 Fédération Nationale du Commerce Extérieure des Produits Alimentaires and Another v French State [1991] ECR I-5505 ). 27 The reply to the national court' s third question should therefore be that the reimbursement of a parafiscal charge like the one at issue in this case, or the use to which the revenue from it is put, may constitute State aid incompatible with the common market if the conditions for the application of Article 92 are met; that assessment falls within the competence of the Commission in accordance with the procedure laid down for that purpose in Article 93 of the Treaty. Costs 28 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, 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 (Sixth Chamber), in answer to the questions referred to it by the Tribunal de Grande Instance, Pau, by judgments of 28 May 1991, hereby rules: 1. Community law, and in particular the machinery of the common agricultural policy laid down for the cereals sector in, inter alia, Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals, precludes a Member State from levying a charge on a limited number of agricultural products over a prolonged period where that charge is likely to encourage economic agents to alter the structure of their production or consumption. It is for the national court to determine whether the charge at issue in a dispute before it has had such effects. 2. A parafiscal charge constitutes a charge having equivalent effect to a customs duty prohibited by Article 12 of the EEC Treaty, when the charge is definitively levied on the importation of certain products, whereas it is reimbursed where those products are manufactured on the national territory, or when the revenue from it is entirely used for the benefit of domestic products only, thereby fully offsetting the charge imposed on those products. If that revenue is allocated in part to those benefits, thus offsetting only partly the burden borne by domestic products, the charge constitutes discriminatory taxation prohibited by Article 95 of the Treaty. 3. The reimbursement of a parafiscal charge like the one at issue in this case, or the use to which the revenue from it is put, may constitute State aid incompatible with the common market if the conditions for the application of Article 92 are met; that assessment falls within the competence of the Commission in accordance with the procedure laid down for that purpose in Article 93 of the Treaty. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII