Although the problem created by this case is very complicated its origin is simple.
The Community sugar market is an organized market and, as you know, there is a levy on the import of sugar from third countries into the Community.
The fruit and vegetable market is likewise an organized market, but it is one of the few markets of this type in respect of which there are no levies or refunds, imports being subject only to customs duties laid down by the Common Customs Tariff.
To combine tnese two organizations ot the markets was both necessary and difficult.
That the sugar content of fresh fruit should be subjected to the levy never contemplated; however, there was apprehension lest, in default of any special provisions, the import of products processed from fruit should create a considerable breach in the protection and equalization system which was set up by the Community rules concerning sugar.
In fact all fruit products contain sugar, either simply natural fruit sugar or else sugar due in part to addition during the processing of the fruit.
Given tne considerable volume or imports of this type of product into the Community, if no action had been taken, large quantities of sugar added to fruit (
To deal with this situation the Council adopted several successive regulations: Regulation No 220/67 of
It is the application of Regulation No 865/68 which lies at the root of the proceedings, concerning which a German finance court has referred to this Court the question of interpretations which you now have to consider.
In September 1969 the Bagusat partnership submitted to a Berlin customs office considerable quantities of cherries in spirit from Yugoslavia.
These cherries are Known in German as
In fact, on inquiry, it appears that this is a variety of a species of cherry known as
At first the German customs authorities took the view that whilst these cherries were liable to customs duty and to various related taxes, they could not give rise to the imposition of the levy on sugar.
However, when an analysis revealed that the sugar content of the goods exceeded the 9 % stipulated by Additional Note No 2 to Chapter 20 of the Common Customs Tariff, annexed to Regulation No 950/68 of the Council of
The importer protested, maintaining that there had been no addition of sugar, and announced his readiness to bring evidence that this was so.
The German customs authorities, however, remained firm, maintaining that, once the sugar content was in excess of 9 %, the levy was payable even if there had been no actual addition of sugar, which they did not contest.
In pursuance ot Article 177 or the Treaty, the competent German finance court hearing this case has referred to this Court the following questions:
In my opinion the problem placed before the Court by the first of these questions has two aspects:
The first is to determine, to repeat traditional terminology, the
Is it tne presence of sugar in excess or a certain percentage?
Is it, on the other hand, merely the
The second aspect of the problem concerns the procedure and the burden of proving that sugar has or has not been added to the processed product.
Regarding the first of the abovementioned aspects of the problem which this Court must solve, three arguments are placed before the Court:
The first is that of the importer, which claims that the levy can be imposed only if there has been an
The second is that pleaded by the German customs authorities before their national court; it consists mainly in the assertion that although there may be some doubt concerning the interpretation of Regulation No 865/68, this doubt is removed by the second paragraph of Additional Note No 2 to Chapter 20 of the Common Customs Tariff which provides expressly that
The third argument is that submitted to the Court by the Commission which regards Additional Note No 2 to Chapter 20 as only a quite secondary consideration but which considers that according to Regulation 865/68 itself, processed products must be subject to the levy even
For my part I am or the opinion that the levy is applicable only when an
This interpretation appears to me in fact to follow, as I shall try to demonstrate, from:
the actual wording of Regulation No 865/68,
the objective pursued by the authors of this regulation,
finally, the principles which the regulation itself lays down with regard to its application.
It seems certain that the authors of the regulation intended to submit to the levy only products processed with the addition of sugar.
The preamble to this regulation sets out the reasons why
There is perfect agreement on this point between the German, French, Dutch and Italian versions.
In all the other provisions of this regulation concerning this levy, to which I shall return shortly, as indeed in those concerning refunds which are established parallel to the levy, the same concept of
Finally, the drafting is almost identical in Regulation No 2275/70 which amended Regulation No 865/68.
The care taken by the Community authorities to specify this point on every occasion is significant in itself.
What were they in fact? To fill a lacuna the Community organization of the market in sugar and to prevent sugar from being introduced into the Community which, imported in its pure state would have been subject to the levy, but which, mixed with fruit, would have escaped it.
It is tnererore apparent that as is the case of fresh fruit, it was not intended to subject to the levy the natural sugar in prepared fruit but only the sugar added to the fruit during the processing operations.
I believe that to interpret the Commumty regulation otherwise would attribute to it a meaning different from that intended by its authors.
The desire of the latter was to protect the Community sugar market, but not to protect the Community market in products processed from fruit as a whole.
It is necessary also to note that the authors of the regulation, probably fearing a misunderstanding on this point, formally expressed their intention, which is the third reason which in my view militates in favour of the interpretation which I commend to the Court.
What is the purpose of such a provision? Why remind everybody of that duty of which we are all aware, to apply the provisions of the Treaty?
The reason appears to be tnat tne authors of the regulation feared that it might be applied too widely.
The reason why they have drawn attention to two articles, 39 and 110 of the Treaty, is because whilst Article 39 enumerates the objectives of the Common Agricultural Policy, Article 110 formally states:
By providing expressly that in the application of Regulation No 865/68, regard must be had to these two articles
The same fear has furthermore been expressed repeatedly by the Parliament and particularly by its Committee on Economic Affairs. In its report of
It is quite obvious that to give to Regulation No 865/68 an interpretation such as would lead to subjecting to the levy fruit processed without any actual addition of sugar would lead precisely to the result which the authors of the Regulation wished to avoid and which gave rise to the fears of the Parliament.
The strength of these various considerations which have already appeared decisive to certain German financial courts Finanzgericht Hamburg, Finanzgericht Baden-Württemberg, Finanzgericht Bremen,
Nevertheless the Commission asks you to adopt the opposite interpretation to that which I have suggested and on this subject puts forward various arguments, all of which are certainly important, but of which none, let it be said at once, appears to me to be decisive.
It consists in tne assertion that in order to interpret the provisions of Article 2 (1) of Regulation No 865/68, they must be read in conjunction with paragraphs (3) and (4) of the same article. The Commission concedes that the statement of reasons on which Regulation No 865/68 is based and Article 2 (1) and several other provisions of the regulation only prescribe the levy for cases of added sugar. But according to the Commission that is not the statement of a binding rule, but rather the declaration of an objective which does not preclude the treatment of products the total sugar content of which, whatever its origin, exceeds certain percentages as products containing added sugar. This argument nad already been outlined by the Commission in a reply to Question No 258/70 from Mr Vredeling ( The use of the conditional In order to find a legal basis for that argument, the Commission in its observations, as I have told you, relies upon Article 2 (3) and (4) of the regulation. These paragraphs concern the procedures for determining as tne Court will nave found on reading the Commission's written observations, that argument is brilliantly developed and most ingenious. It has not convinced me, however, because in my opinion it arises from confusing for dialectic purposes two fiscal concepts which I consider must, on the contrary, always be distinguished carefully: The chargeable event, the the detailed rules concerning the basis of assessment, the In the present case it is certain that paragraphs (3) and (4) of Article 2 of the Regulation refer solely to the detailed rules concerning the the inter-relation of the various paragraphs of Article 2 appears to me capable of being summarized shortly in the following manner: If tnere is added sugar (paragraph (1)), the added sugar content from which the levy is calculated is determined as described in paragraphs (3) and (4). The technical explanations which we were given the other day during the oral proceedings have reinforced my conviction upon this point, because it appeared to me in fact to follow from them that, although there is a difference of opinion as to the possibility of detecting easily the presence of added sugar in a product manufactured from fruit, there is agreement on the point that it is practically impossible to ascertain the quantity of added sugar. Thus it is perfectly understandable tnat the Council was able to introduce a levy which is applicable only to products which have actually had sugar added to them and to provide at the same time that the added sugar content is calculated by methods partly depending on It is based on the fact that when the Community authorities wished to exempt products containing a strong concentration of natural sugar from the levy, they adopted special regulations for that purpose. At nrst sight this appears to be a very weighty argument, because from the existence of the regulations relied upon (to my knowledge there are four of them, of which three relate to fruit juice) one might well infer But an examination of the actual wording of these regulations in my view removes the value of this argument largely if not totally. in fact what do these regulations achieve, whether they be Regulation No 1604/68, Regulations Nos 455/69, 1906/70 or 2613/70? They amend Annex A to Regulation No 865/68, that is to say, the table to which Article 2 (3) and (4) of the regulation refer, which as I have just endeavoured to show you, concern merely the detailed rules relating to the basis of the assessment to levy not the chargeable event giving rise thereto. Their effect is tnus to diminish or even reduce to nothing the amount of the levy when it is applicable, but not to modify the conditions of its applicability. Furthermore, they could not, I believe, legally have such an effect because as these regulations are Council regulations, they are regulations adopted without the opinion of the Parliament, and are thus implementing regulations applying basic Regulation No 865/68 and therefore cannot legally extend or restrict the field of application of the levy introduced by Article 2 (1) of that basic regulation. The Commission's third group or submissions is based upon the alleged physical impossibility in which the customs authorities would find themselves of applying the Community rules if they could not have recourse, in order to determine the presence or absence of added sugars, to this But this last argument is linked in fact to a second aspect of the first question which has been submitted to you by the German finance court and which I mentioned to you earlier: the system of proof of the addition or absence of added sugar.
This second aspect of the first of the questions which are submitted to you by the German court leads me to consider the relationships between Regulation No 865/68 and Additional Note No 2 to the Explanatory Notes to Chapter 20 of the Common Customs Tariff.
Note No 2 in its 1968 edition reads as follows:
pineapples and grapes 13 %
other fruits, including mixtures of fruit 9 %
The Berlin Customs Office, by a legally questionable argument but one which nevertheless had logic and simplicity on its side, had considered that this provision at the same time as fixing the applicable customs duty determined the products subjected to the levy.
The Commission has seen the dangers in this reasoning and has expressly set it aside.
In fact, it says, although they were adopted on the same day, the regulation relating to the Common Customs Tariff and Regulation No 865/68 have different fields of application.
Certainly Article 9 of Regulation No 865/68 does refer to the general rules and the special rules of interpretation of the Common Customs Tariff, but it refers to them only for the tariff classification of the products to which the regulation relates.
The Commission considers also that the common external tariff was not able to create a
The Commission pursues its argument by claiming that if, in accordance with what I was suggesting to you just now, you do not accept the creation of this legal fiction by Regulation No 865/68, the whole system created by Additional Note No 2 would collapse. The customs authorities would then have to determine in each case whether each product contains added sugar or not, which for both practical and scientific reasons they would be unable to do.
I hope that the Commission will not bear a grudge against me if I say that its argument reminds me of the proverb:
The Commission is so eager to have the Court interpret Regulation No 865/68 as enabling even products containing no added sugar to be subjected to the levy that it in my view exaggerates the consequences of a contrary interpretation.
If it is accepted that Regulation No 865/68 only enables products processed with the actual addition of sugar to be subjected to the levy, Additional Note No 2, to which Article 9 refers, not only does not become void, as the Commission maintains, but on the contrary it enables Regulation No 865/68 to be applied in a way which is both legally acceptable and takes account of the practical requirements of the customs authorities.
In fact, unlike the Commission, I feel that Additional Note No 2 does not create a
If the product contains less than 9 % sugar, it is presumed to contain only natural sugar and it would then be for the customs authority, if it had doubts on this point, to prove the addition of sugar. This last hypothesis is purely theoretical as regards products which come under heading
As I see it, three reasons appear to militate in favour of this method of interpretation of the Additional Note.
Even the presumption
When there is a presumption I believe that it is necessary always, except where there is an express indication by the legislature, to regard a presumption
The 1968 wording says:
The amended 1969 wording includes the same phrase.
According to the information which I have been able to cull from various works of reference, and to the extent to which I have understood them correctly, it appears that both parties are partially right.
It appears in fact that
It appears on the other hand that specialized laboratories may in any case be able to
However that may be, if the Court accepts the interpretation which I suggest with reference to the method of proof, the question loses much of its importance.
If the sugar content of a product which comes under heading
To sum up I therefore propose to the Court that it should answer the first of the German finance court's questions by ruling that:
In conclusion let me say a word concerning the second and third questions referred by the German finance court.
Let us take note first of all that if this Court accepts the interpretation which I have just proposed, these questions become pointless and the Court has no need to reply to them.
If on the contrary you accept the interpretation proposed to you by the Commission, the validity of Regulation No 865/68 thus understood would appear to me very doubtful for at least two reasons:
Since the object of the regulation is to impose the levy on the sugar
In my opinion, to subject to the levy products processed from fruit containing no added sugar, which the Commission very fairly accepts would follow from the interpretation which it proposes, would in my view far exceed the desired object which was merely to prevent
The Commission, it is true, maintains that the charge thus imposed on importers would to a certain extent be compensated for by the fact that with the interpretation which it suggests to you, processed products containing added but having a total sugar content which is below certain percentages would escape the levy (this is the case for example in respect of pineapples).
But it is not at all certain that the charges and the advantages would affect the same importers.
I think on the contrary that a measure which makes products containing only natural sugar liable to a levy would be contrary to the principle of proportionality which, the Court has held,
It could only be otherwise, in my view, if an expert's report ordered by the Court showed that contrary to my belief the addition of sugar is not only difficult but
I hope that the Court will consider, as I do, that it is not necessary for it to consider these questions or to order that measure of inquiry, and I conclude that you should hold that: