On the basis that the time limit fixed by Article 38 (3) of the EEC Treaty operates as a period of limitation, from the expiration of which the Council, was no longer competent to add to the list of agricultural products, the Commission avers that Regulation No 7a, according to its Article 2, was to enter into force on 31 December 1959, that is, within the time limit. Since it was published in 1961, it is clearly a case of retroactivity which cannot have adverse effect, given that retroactive validity was not invoked in order to assert legal consequences.

Moreover, Article 38 (3) of the Treaty does not require that publication should take place during the course of the period of authorization. It is merely provided that the Council shall take a decision within that period. In the absence of any special provision the Council could have chosen a form which would not require publication in the Official Journal.

The Commission concludes that it is enough that a formal decision to adopt Regulation No 7a should have been taken within the time limit. The addition of new products to the list in Annex II to the Treaty has no direct effect on their legal position, but simply offers the possibility of including them subsequently in measures concerned with agricultural policy. No common organization of the market exists up to the present time in respect of the alcohol mentioned in Regulation No 7a.

The Commission is of the opinion that the first stage of the manufacturing process comprises all processes for the making and producing of ethyl alcohols of all strengths from agricultural products. The subsequent stage in processing comprises all operations which remove from this alcohol its original character and create new products having specific qualities.

Ethyl alcohol of a strength of less than 80o is nothing more than a neutral mixture of pure ethyl alcohol and water.

The distinction made in heading No 22.09 of the Brussels Nomenclature between

is reflected in the subheadings or heading No 22.09 of the Common Customs Tariff:

The term spirituous beverages was preferred to the expression brandies, liqueurs and other beverages, which gives rise to difficult problems of translation.

A mixture or alcohol and water or a strength of less than 80o is covered by subheading No 22.09-A. Such a mixture of a strength of only 55o or less, which can thus be drunk directly, remains a mixture of alcohol and water, covered by subheading No 22.09-A.

Annex IV to the Common Customs Tariff in EEC Regulation No 950/68 speaks of tariff concessions provided under GATT. In the case of liqueurs and brandies, and of ethyl alcohol, undenatured, under heading No 22.09-A, the introduction of a strength of up to 46·2o clearly has the aim of limiting the agreed tariff concessions to beverages directly intended for human consumption. Accordingly, ethyl alcohol directly suitable for human consumption cannot be considered as a spirituous beverage within the meaning of subheading No 22.09-C.

The Explanatory Notes concerning subheading 22.09-A in the Brussels Nomenclature confirm these comments.

Products within subheading No 22.09-C are to be differentiated from those within subheading No 22.09-A by reason of the specific organoleptic properties of spirituous beverages. Very pure ethyl alcohol does not possess such properties and is not, for that reason, a spirituous beverage within the meaning of tariff subheading No 22.09-C, even though it is drinkable.

The Commission suggests the following answer to the third question:

Tariff subheading No 22.09-A (ethyl alcohol, undenatured, of a strength of less than 80o) covers mixtures of water and ethyl alcohol having, at a temperature of 15o C, a strength in ethyl alcohol less than 80o under the Gay-Lussac method, whatever may be their actual or potential use. It is apporpriate also to classify under this tariff subheading mixtures of water and ethyl alcohol capable of direct consumption, to the extent that they do not contain special flavouring sub-stances.

The Council submits to the Court a minute of its 26th session, of 18 December 1959, to show that the decision to add the products in question to Annex II to the Treaty was in fact made on 18 December 1959.

Since Article 38 (3) of the EEC Treaty does not specify the legal form of the act required for additions to the Treaty, there is a choice between a regulation and a decision sui generis. The problem of legislative technique was one of the numerous problems concerned with the form acts should take which were due to be resolved at that time, and was not resolved until a year after the decision of the Council.

The Council maintains that the rules of Article 38 (3) providing for a proposal by the Commission and adoption by the Council were complied with. Having taken its decision as to the content in due form, the publicity required to be given thereto had only a declaratory character, rendering the measure applicable to individuals.

Having ascertained that most of the Member States make a distinction between the promulgation of a law and its publication, this last being only a matter of declaration, concerned with applicability, the Council concludes that this distinction is made in the EEC Treaty in Article 189 (promulgation) and Article 191 (publication). The requirement of publication in the Official Journal for entry into force does not affect validity, but concerns applicability and the taking of effect.

Whilst conceding that the Regulation in question could not become directly applicable until after publication, the Council rejects the objection as to retroactivity. It adds that the application as from 1 July 1968 of EEC Regulation No 950/68 of the Council concerning the Common Customs Tariff, Article 2 of which allows of non-application of the tariff to agricultural products, is the first consequence for the product in question of its addition to Annex II of the Treaty.

The Council considers that the concept of first-stage processing cannot be interpreted too rigorously. The products which appear in the original Annex II have the character of agricultural products by reason of their inclusion in the Treaty. Several of these products are not not processed products as strictly interpreted. The Council considers that it is justified in applying the same interpretation of Article 38 (1) as did the authors of the Treaty. Moreover, it is open to question whether the addition of water to reduce the alcoholic strength of a distilled agricultural product is a process distinct from that of distillation.

In the view of the Council, unrefined products defined exclusively according to their basic chemical composition come under subheading No 22.09-A, whereas products which are more specific, prepared in accordance with well-defined rules, particularly those of local tradition, and made to original or special recipes come under subheading No 22.09-C. These products may answer to generic definitions recalling the basic products entering into their composition. Moreover, they are beverages suitable for consumption.

According to the United Kingdom, the power given to the Council by Article 38 (3) to add products to the list in Annex II, does not extend to those products falling outside the meaning of the expression agricultural products as defined in Article 38 (1).

The Treaty itself provides that products in the list as it was framed originally are governed by Articles 38 to 46 of the Treaty. In drawing up the list, the authors of the Treaty exercised a particular power, in the same way as when they gave a definition of agricultural products in Article 38 (1). In so doing they created the Grundnorm of the Community.

The Council, however, when exercising the power to add products to the list was not in the situation of the authors of the Treaty and could not add to that Grundnorm.

In the view of the United Kingdom, alcohol to which water is added is a product which has progressed beyond first-stage processing. The production of ethyl alcohol, covered by tariff headings Nos 22.08 and 22.09, whatever its alcoholic strength, is the result of a series of processes. Although fermentation may possibly amount to first-stage processing, the production of ethyl alcohol of any kind requires a second process, namely, distillation.

From that it follows that products under tariff headings Nos 22.08 and 22.09, being neither products of the soil, of stockfarming nor of fisheries, nor products of first-stage processing directly related to such products, are not agricultural products within the meaning of Article 38 (1) of the Treaty and cannot therefore be added to the list in Annex II to the Treaty.

The manufacture of ethyl alcohol from products of the soil involves more than one processing stage. To produce ethyl alcohol from cereals there are four stages, namely: milling, brewing, fermentation and, lastly, distillation.

Ireland is of the view that by reason of the various processing stages required for the production of ethyl alcohol from agricultural products, this type of alcohol does not constitute, whatever its strength, an agricultural product within the meaning of Article 38 of the Treaty and cannot, accordingly, validly be included in the list in Annex II to the Treaty of Rome.