Contents
In Case 11/78REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal de Grande Instance, Lure, for a preliminary ruling in the proceedings pending before that court betweenS.A. DES GRANDES DISTILLERIES PEUREUX, Fougerolles (Haute-Saône),andDIRECTEUR DES SERVICES FISCAUX DE LA HAUTE-SAÔNE ET DU TERRITOIRE DE BELFORT, Vesoul,THE COURTcomposed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,Advocate General: H. MayrasRegistrar: A. Van Houttegives the following
Judgment
Facts and Issues
The order for reference and the written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
I —Facts and procedure
Article 268, enacted by Decree No 74/91 of 6 February 1974 (Journal Officiel de la République Française of 8 February 1974), of Annex II to the Code Général des Impôts provides: ‘distillation of all imported raw material, with the exception of fresh fruit other than apples, pears or grapes shall be prohibited’.At the beginning of 1976 the Peureux company, the plaintiff in the main action, imported from Italy oranges steeped in alcohol, and by letter of 24 October 1976 asked the Administration des Contributions Indirectes [Indirect Taxation Department], the defendant in the main action, to confirm its right to distil these products. By letter of 1 March 1977 the said administration replied that the provisions of Article 268 of Annex II to the Code Général des Impôts prevented compliance with the request since the imported oranges were not fresh fruit as they were steeped in alcohol.In the Tribunal de Grande Instance, Lure, before which the action was brought, the plaintiff in the main action alleged in the first place that the imported product (oranges steeped in alcohol) was not raw material within the meaning of the national provisions in question and alternatively in any event the national provisions were not applicable since they were incompatible with the provisions of Community law and in particular with Article 7 of the EEC Treaty (adjustment of commercial monopolies).After deciding that oranges steeped in alcohol and imported from Italy were ‘raw material’ within the meaning of Article 268 of Annex II to the Code Général des Impôts and thus accepting, at least by implication, that the product fell within the prohibition on distillation provided for in that Article on the same basis as all other raw material not covered by the exceptions expressly mentioned therein, the national court referred the following question to the Court of Justice for a preliminary ruling under Article 177 of the Treaty: ‘Is the prohibition in France on the distillation of spirits from any imported raw material, with the exception of fresh fruit other than apples, pears and grapes (Article 268 of Annex II to the Code Général des Impôts), compatible with Articles 10 and 37 or any other provision of the Treaty of Rome on the free movement and circulation of products coming from third countries, in particular as regards the distillation of spirits from oranges steeped in alcohol coming from Italy?’The judgment of 21 April 1978 making the reference was registered at the Court of Justice on 19 May 1978. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC the plaintiff in the main action and the Commission submitted written observations.After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory enquiry.
II —Observations under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A —Observations of the plaintiff in the main action -
Taking the view that the Court in giving preliminary rulings under Article 177 of the Treaty cannot rule on the interpretation and validity of national provisions, the plaintiff in the main action proposes to read the question from the court making the reference as follows:‘Should Articles 10 and 37 of the EEC Treaty or any other provision of the Treaty on the free movement and circulation of products coming from third countries be interpreted as meaning that no national provision or measure is allowed prohibiting the distillation of certain raw material imported from other Member States of the EEC, such as oranges steeped in alcohol coming from Italy?’
Article 10 of the EEC Treaty
In referring to Article 10 on products coming from third countries and in free circulation in a Member State the national court was querying whether restrictive measures on the import of goods originating in third countries were compatible with the Treaty.In the present case the oranges steeped in alcohol and imported into France originated in Italy or had been imponed and then prepared in that Member State and accordingly were in free circulation there. As regards goods in free circulation Article 9 (2) of the Treaty provides for the application of Articles 30 to 37 of the Treaty. Where products originating in third countries have been added in the manufacture of goods originating in another Member State, Article 16 of Regulation No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (Official Journal 1977 L 73, p. 1) provides by implication that goods obtained from products in free circulation are to be admitted to free circulation within the Community.The plaintiff in the main action accordingly takes the view that products in free circulation in a Member State of the Community which have either been completely obtained in a third country or have been prepared from products originating in third countries must be admitted to free circulation between the Member States, subject only to the protective commercial measures authorized by Article 115 of the Treaty.
Article 37 of the EEC Treaty
Article 268 of Annex II to the Code Général des Impôts prohibits the distillation of certain imported raw material; the prohibition is pan of the economic system for alcohol which prohibited the import of pure alcohol and then in a supplemental provision prohibited the import of raw material for making alcohol. Article 37 of the Treaty provides that Member States shall adjust any State monopolies of a commercial character. The Court held in Case 59/75 Pubblico Ministero v Manghera [1976] 1 ECR 91 (judgment of 3 February 1976) that it follows from Article 37 and its structure ‘that the obligation laid down in paragraph (1) aims at ensuring compliance with the fundamental rule of the free movement of goods throughout the Common Market, in particular by the abolition of quantitative restrictions and measures having equivalent effect in trade between Member States. This objective would not be attained if, in a Member State where a commercial monopoly exists, the free movement of goods from other Member States similar to those with which the national monopoly is concerned were not ensured’.Further the Court took the view in Case 91/75 Miritz [1976] 1 ECR 217 (judgment of 17 February 1976) that ‘Article 37 (1) is not concerned exclusively with quantitative restrictions but prohibits any discrimination, when the transitional period has ended, regarding the conditions under which goods are procured and marketed between nationals of Member States. It follows that its application is not limited to imports or exports which are connected with its existence and affect trade between Member States in certain products, whether or not subject to the monopoly …’.The plaintiff in the main action infers from this case-law that since the prohibition on distilling certain raw material is clearly connected with the existence of the monopoly it is an obstacle to import from other Member States and accordingly discrimination in the conditions of supply in so far as the same raw material of French origin can be freely distilled.The appropriate answer to the national court is therefore that since the end of the transitional period Article 37 (1) no longer allows a Member State to prohibit distillation of raw material imported from other Member States.
Articles 30 to 33 of the Treaty
The plaintiff in the main action cites the ruling in the Judgment of the Court of 11 July 1974 in Case 8/74 Dassonville [1974] 1 ECR 837 to the effect that all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions. It also cites Commission Directive of 7 November 1966, No 66/683, on the abolition of all difference in treatment between national products and products which under Articles 9 and 10 of the Treaty must be allowed into free circulation (Journal Officiel 1966, p. 3748) and in particular Article 1 (a) thereof to argue that the prohibition in question constitutes a quantitative restriction on trade. The plaintiff in the main action cites the judgment of 16 March 1977 in Case 68/76 Commission v French Republic,‘Potatoes’, [1977] 1 ECR 515 and adds that the fact that a national economic system for a product should have been replaced by a Community system and this has not been done does not justify the maintenance of obstacles to trade until the entry into force of such a system. Since the prohibition in Article 30 et seq. of the Treaty is no longer subject after 31 December 1969 to the derogations in Article 37 (4) of the Treaty, the plaintiff in the main action concludes that since the end of the transitional period Articles 30 et seq. of the Treaty no longer allow a Member State to prohibit the complete or partial use of a product from another Member State of the EEC.It accordingly proposes that the answer to the question raised should be that ‘Articles 30 to 37 of the EEC Treaty must be interpreted as meaning that as from the end of the transitional period national provisions or measures limiting or prohibiting the complete or partial use of products originating in another Member State or in free circulation there constitute measures having an effect equivalent to a quantitative restriction and prohibited by the said Articles’.
B —Observations of the Commission of the European Communities
After referring to the history of the case the Commission observes that it has initiated a procedure against the French Republic for failure to fulfil an obligation, with a view to its abolishing the prohibition in question on distilling certain raw material imported from other Member States.Turning to consideration of the question raised the Commission observes in the first place that it should be reworded. It adds that having regard to the wording of the question which refers inter alia to Article 10 of the Treaty on the entry into free circulation of products originating in third countries and to the recitals in the order for reference, it will give its views on the compatibility of the provision in question with Community law not only because the latter refers to products originating in a Member State or in free circulation there but also because it refers to products imported directly from a third country.
Article 37 of the Treaty
In the Commission's view Article 37 of the Treaty is no longer applicable in the sector concerned because as a result of the adjustments made by Decree No 77/842 of 25 July 1977 (Journal Officiel de la République Française of 27 July 1977) alcohol no longer constitutes a commercial monopoly within the meaning of the article. Although France still has the exclusive right to produce alcohol reserved for the State, under Article 222 of the Treaty this right as such is compatible with the Treaty as is the exclusive right for a State to market its own production. Such an exclusive right is no longer a monopoly of a commercial nature within the meaning of Article 37 unless it extended to imported products originating in other Member States, which is not the case. The Service des Alcools therefore no longer has exclusive right to import, export and market in relation to alcohol reserved to the State. Since such rights are the very essence of the monopoly their disappearance will necessarily involve the disappearance of the latter. Even if Article 268 of Annex II to the Code Général des Impôts could be regarded as concerning the rules relating to the monopoly nevertheless as from the end of the transitional period it has to be considered in relation to Article 30 of the Treaty.
Article 30 of the Treaty
In the Commission's view the national court rightly observes that it would appear contradictory to allow oranges steeped in alcohol to enter France and to prohibit their distillation, for which purpose they seem normally to be intended. By making it pointless to acquire a product it is possible to restrict its import.Since the prohibition on distillation does not apply to raw material of national origin the measure in question may be regarded as a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty. In this respect it is right in the Commission's view to stress that among the measures having an effect equivalent to quantitative restrictions on imports the Commission Directive No 66/683 of 7 November 1966 lists provisions laid down by law, regulation or administrative action prohibiting the complete or partial use of an imported product in processing or incorporation. (Article 1).The prohibition on measures having an effect equivalent to quantitative restrictions contained in Article 30 of the Treaty applies only to products originating in a Member State or in free circulation there. It is therefore necessary also to consider the case of products (here oranges steeped in alcohol) coming directly from a third country. The Commission observes that oranges steeped in alcohol come under heading No 20.06 B 1(e) of the Common Customs Tariff and are therefore covered by the consolidated 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). Article 13 (2) thereof stipulates that save as otherwise provided in the said regulation or where derogation therefrom is decided by the Council, acting on a proposal from the Commission, the levying of any charge having equivalent effect to a customs duty and the application of any quantitative restriction or measure having equivalent effect shall be prohibited in trade with non-member countries. This prohibition applies to the products in question as from 1 October 1975 under the second paragraph of Article 9 of Regulation No 1927/75 of the Council of 22 July 1975 (Official Journal L 198, p. 7), which article is adopted in the consolidation represented by the said Regulation No 516/77.In view of the above observations the Commission suggests that the question should be answered as follows:‘The prohibition on distillation of imported raw materials and in particular oranges steeped in alcohol originating in a Member State or in a third country but in free circulation in another Member State has since 1 January 1970 been contrary to Article 30 of the EEC Treaty. Such prohibition in so far as it relates to raw materials such as oranges steeped in alcohol imported from a third country has since 1 October 1975 also been contrary to Article 13 (2) of Council Regulation No 516/77 of 14 March 1977.’The plaintiff in the main action, represented by A. Tisserand of the Belfort Bar, Vesoul, and P. Didier of the Brussels Bar, and the Commission of the European Communities represented by its Agent, Mr Béraud, made oral observations.The Advocate General delivered his opinion at the hearing on 14 December 1978.
Decision
Article 30 of the Treaty
Article 10 of the Treaty
Article 37 of the Treaty
Costs
Operative part
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.