F.lli Cucchi v Avez S.p.A (77/76)

Fith, sixth, seventh and eighth questions

Although it has a different name, the special surcharge possesses substantially the same features as the tassa di sfioramento on increased value which was the subject of Case 23/75 Rey Soda v Cassa Conguaglio Zucchero (Judgment of the Court of 30 October 1975, [1975] ECR 1279). In that case the Court ruled that it was in principle for the Commission to adopt “a measure of equalization in order to prevent the market from being disturbed as a result of an alteration in price level on the change-over from one sugar year to the next”.This finding refers to administrative measures expressly provided to deal with developments connected with the change-over from one sugar year to the next. The Community institutions which control the market are, a fortiori, empowered to adopt administrative measures which may prove to be equally necessary in the course of a single sugar year (see, for example, the tenth recital in the preamble to Regulation (EEC) No 3330/74). This assignment of power to the Community institutions means that it is not within the competence of Member States to adopt a domestic measure subjecting the stocks of a single specific product to the payment of a pecuniary charge on a given date, whatever the measure may be called in national law.Even though the Member States are acknowledged to have certain powers in fiscal matters, those powers cannot constitute authority for a derogation from the principles governing the division of powers under the common organization of the markets. To concede that a Member State may have the power to subject an agricultural product to a levy specifically adopted for that product would result in upsetting the machinery provided for the formation of prices and, above all, by creating discrimination, would result in distortion of trade. To grant such freedom to the States would result in a permanent threat to the common organization of the markets.The measure introducing the special surcharge is intended to be very similar to the tassa di sfioramento since it exempts from the surcharge up to two-twelfths of the stock in hand held by consumer undertakings. The special surcharge was also imposed by the Sugar Equalization Fund in order to achieve its objectives and, furthermore, it expressly pursued the objective of equalization. Finally, the special surcharge is clearly revealed as a device for regulating the market by the fact that the decision of the CIP (first recital) expressly adopted it in view of the need “to adjust the prices of sugar on the basis of the increase in the intervention price”; the levy imposed on stocks is therefore seen to be in its entirety one of the administrative measures which, under Regulation (EEC) No 3330/74, are reserved to the Commission.Again, reference can be made to other grounds of incompatibility already described in connexion with the normal surcharge. In particular, as regards the prohibition of discrimination it is open to question whether this prohibition is observed by a measure which exempts the consumer undertakings from the pecuniary charge by referring to stock “on hand” without at the same time exempting stocks held by the large importing undertakings.From the point of view of retroactive effect, the special surcharge is infinitely more serious than the tassa di sfioramento. In view of the fact that when the Commission altered prices at the time of the change-over from one sugar year to the other, it had not adopted any equalization measure imposing a financial levy on sugar stocks, the traders had specific and reasonable grounds for wholly discounting the possibility of any “surprises”. They were therefore in a position to take the decisions on this basis in their sugar dealings. In consequence, the special surcharge changed the legal and economic position of Italian traders.Retroactive measures are inconsistent with respect for acquired rights, which is a principle of the rule of law on which the Court has always laid special emphasis. As for the principle of good faith it can be inferred from the judgment of 4 July 1973 in Case 1/73, Westzucker v Einfuhr- und Vorratsstelle Zucker ([1973] ECR 723) that a trader is entitled not to suffer injury through a measure adopted contrary to all reasonable expectations. It is obvious that a measure runs counter to every reasonable expectation if it clearly has retroactive effect.In Case 2/75, Einfuhr- und Vorratsstelle Getreide v Mackprang (Judgment of 27 May 1975, [1975] ECR 607) the Court declared that the principle of good faith is always protected when a trader claims individual rights which, under the Community legal system, are considered to be worthy of protection. In the present case there can be no doubt that the rights of traders in the sector in question are worthy of protection: after being exempted from a Community levy on sugar stocks, those traders subsequently found themselves affected by an Italian measure which, in addition, had retroactive effect.The eighth question draws attention to another reason why the special surcharge is illegal, namely, the fact that the big importers are subject to a pecuniary charge for the benefit of domestic sugar producers, although, in importing sugar from Member States in order to supply it to the Italian consumer industries, these importers perform a very useful function in a deficit market.The Government of the Italian Republic considers that the origin, structure and working of the ordinary surcharge enable the first questions submitted for a preliminary ruling to be answered wholly in the negative. The surcharge is a fiscal measure imposed by the State in order to offset increases in the cost of production of home-produced sugar to meet industrial and structural difficulties recognized by the Community and within the limits authorized by it. It affects home-produced sugar and imported sugar in the same way, to the same extent and under the same conditions; it is to be paid by the consumer and forms an integral part of the price. As regards imported sugar, the surcharge is imposed because this sugar is consumed in Italy and not because or as a result of crossing the frontier and this makes it impossible to describe the ordinary surcharge as a charge having an effect equivalent to a customs duty.Since the surcharge consists of an internal levy imposed both on the domestic and the imported product, it cannot be regarded from the point of view of the principle of non-discrimination provided for in Article 95 of the EEC Treaty.For the decisions in Capolongo and IGAV to be applicable to a charge of this kind it must be possible to establish that the proceeds of the charge on the imported product finance the national product which (a) is not subject to any charge and (b) benefits from an unauthorized subsidy. These two features are not present in the case of the ordinary surcharge on imported sugar. In the first place, the proceeds of the surcharge on imported sugar are in themselves insufficient to finance the subsidies to beet producers and to the processing industry. This is, therefore, far from being a case where, in effect, the charge is applied exclusively on the imported product. On the contrary, it is also applied, and to a greater extent, to home-produced sugar because the consumption of the domestic product is much greater than that of the imported product. In connexion with this second point it must be borne in mind that the subsidies in question are lawful and authorized by the Community.As regards the characteristic features of the “pecuniary charge” described by the court making the reference, the Italian Government submits the following observations: