Welding & Co. v Hauptzollamt Hambourg-Waltershof (87/78)

II —Summary of the written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice

The Commission of the European Communities recalls first the facts of the original dispute. It then proceeds to the legal consideration of the problems raised in the questions submitted.It makes the initial remark that the contested provision has been applied without difficulty for almost ten years and states that the rules of which it forms part were only enacted after scrupulous consideration and consultation with an expert whose opinion it produces.With regard to the first preliminary question the Commission then endeavours to justify the method of calculating the levy and to counter the other reasons for the invalidity of the disputed provision mentioned in the order.It recalls first of all the factual basis of the problem. Maltrose is a sugar which falls under tariff heading 17.02 D of the Common Customs Tariff; dextrin, a starch degradation product, is included under tariff heading 35.05 but, according to Note 2 to Chapter 35, dextrin is to be considered as a starch degradation product with a reducing sugar content (sugars which reduce cupric salts in an alkaline solution from a higher level of oxidation to a lower — glucose, fructose, maltose, galactose, lactose, etc. and which can thus be identified) expressed as dextrose (chemically pure glucose) on the dry substance not exceeding 10 %. The malto-dextrins having a higher reducing sugar content fall under heading 17.02.Since the imported goods, ‘maltrin 10’ and ‘maltrin 20’ have a maltose, reducing sugar content of 11.6 % and 18.2 % respectively the dextrose equivalent thus exceeds the limit of 10 % fixed in Note 2 to Chapter 35 of the Common Customs Tariff. This means that the goods as a whole are to be classified in heading 17.02 D of the Common Customs Tariff and must accordingly be treated as sugar.The levy on sugar is calculated in accordance with the method described in Article 15 (5) of Regulation No 3330/74 and in Article 7 of Regulation No 837/68. That method consists in calculating first the sucrose content of a product, including other sugars expressed as sucrose, and multiplying that content by the basic amount of the levy (Article 7 (1) of Regulation No 837/68). However current techniques of analysis do not permit the sucrose content to be calculated in accordance with the uniform method for all sugar. That is why the Commission, when it adopted Regulation No 837/68, found it necessary to prescribe different methods depending on the composition of the product for determining the total sugar content. Following lengthy discussions with scientists it became clear that for most products the so-called Lane and Eynon method, which consists of inverting the sugar in a solution, must be regarded as the most reliable. It is prescribed in the first subparagraph of Article 7 (2) of Regulation No 837/68 as the method used generally to determine the total sugar content. Nevertheless, like other known methods of analysis, it is not effective with certain compounds, which moreover rarely occur in international trade, in particular simple sugars such as glucose, fructose, hexose, pentose, etc. Since for such products there is no more accurate alternative method the second subparagraph of Article 7 (2) adopts the dry matter content as the basis.This objective method has not given rise to difficulties in its application. In the present case the compound of imported malto-dextrin should have led to the straightforward application of the second subparagraph of Article 7 (2) of Regulation No 837/68 as amended. The fact that imports of maltose and of dextrin separately and not as a mixture are not taxed so heavily does not follow from the provision in dispute but from the definition of dextrin given in the Common Customs Tariff itself; such cases are inevitable since any classification of necessity entails drawing dividing lines.It remains to be considered whether any discrimination results from applying different coefficients to the sucrose content. The coefficient 0.95 applicable under the first subparagraph of Article 7 (2) is justified because of the inversion of sugar which increases the initial sucrose content by some 5 % and occurs in the application of the Lane and Eynon method recommended where the said first subparagraph applies; the coefficient returns the content to its initial value. The method recommended in the second subparagraph does not entail any overestimate of the content and thus need not be counterbalanced; in that case it is accordingly proper to apply the coefficient 1.The Commission then considers the other grounds of invalidity mentioned in the order of the Finanzgericht.The requirement to provide a statement of reasons does not necessarily extend to the details of every rule in an important regulation (judgment of 13 March 1968 in Case 5/67 [1968] ECR 83 and judgment of 20 June 1973 in Case 80/72 [1973] 1 ECR 635, at p. 651. To require a more detailed statement of reasons would result in prolixity and in fact lead to scientific commentaries or dissertations. It is accordingly unobjectionable that the relevant recital to Regulation No 837/68 merely stated ‘To avoid distortions of competition, it is necessary to specify in respect of these products the method by which sucrose content … is to be determined’.Furthermore the second subparagraph of Article 7 (2) as amended does not constitute a derogation from Article 15 (5) of basic Regulation No 3330/74. Indeed the wording of the latter provision (and above all the words ‘on the basis of the sucrose content’) establishes that the Council did not envisage a precise fixing of the sucrose content including other sugars expressed as sucrose, but permits other criteria to be adopted inasmuch as the sucrose content remains the essential factor in calculating the levy. Furthermore the dry matter corresponds in practice almost exactly to the total sugar content.With regard to the second preliminary question, the Commission is of the opinion that there is accordingly no further need to consider it.The Commission finally suggests that the reply to the questions asked by the Finanzgericht Hamburg should be as follows:‘Consideration of the questions submitted has disclosed no factors of such a kind as to affect the validity of the second subparagraph of Article 7 (2) of Regulation (EEC) No 837/68 of the Commission of 28 June 1968.’The plaintiff in the main action has delivered a copy of the statement which it has addressed to the Finanzgericht in the main action together with technical information on the Somogyi method of. calculating sugar contents in maltose and cereal derivatives.It adds that Article 7 (2) of Regulation (EEC) No 837/68 merely constitutes an -explanation and, in appropriate cases, a basis for calculating the levy in accordance with paragraph 1. The second subparagraph of paragraph 2 only lays down another method of calculating the sucrose content, including others sugars expressed as sucrose, differing from the method laid down in the first subparagraph. The concept of ‘dry matter content’ referred to, in the first sentence of the second subparagraph must, on a logical interpretation, be read as meaning ‘the dry matter content in sucrose including other sugars expressed as sucrose’. The meaning of this (which furthermore is in accordance with that regulation and with Regulation (EEC) No 3330/74) is that only the sucrose content found in the dry matter, including the content of others sugars expressed as sucrose, should be subject to the levies applicable to sugar.