First of all I shall consider the principal period, namely that for which the declarations were properly made.

It may appear superfluous to consider once again whether the inductive method may in principle be applied: in fact in previous proceedings (Joined Cases 5 to 11 and 13 and 15/62 [1962] E.C.R. 449) in which the applicant was also involved and which concerned the production of electricity invoices, the Court has already found that:

It is unnecessary, however, to restrict ourselves to this reference, since the present proceedings have proved afresh the accuracy of these findings. It appears from the report of the Société Fiduciaire Suisse produced after the conclusion of the oral procedure that the applicant apparently did not keep a number of normal accounting books (such as those relating to the imports of ferrous scrap, the invoice book, industrial accounts and stock accounts—page 2 of the report) or only kept them after 1958 (such as the books showing the movements of scrap within the undertaking—page 2 of the report), that it had destroyed other documents (weight slips and transport documents—page 2 of the report) or that certain documents were missing (such as the registers of semi-finished products—page 2 of die report) and finally that the applicant's lawyer had expressly refused to produce other documents (such as the journal and the balance sheet book—page 3 of the report) or that the documents produced related only to a limited period (namely January 1957, in respect of certain purchase and sales invoices—page 6 of the report) and, in addition, appeared to be incomplete. Although it is true that in 1962 the applicant seemed more inclined to make its documents available to the inspectors (despite the initial resistance at the time by the applicant's lawyer), it is nevertheless clear from the report in our possession that for this period as well certain documents were lacking (like the register of semi-finished products for 1957—page 6 of the report, contrary to the assertions of the applicant's lawyer in his statement of 11 November 1966) and that the declarations made revealed inaccuracies (with regard to the foundry scrap bought by I.S.A.P.—page 8 of the report), or else that there were irreconcilable contradictions between the books, the declarations and the technical analyses (for example, between the balance sheet book and the declarations concerning the stocks of ferrous scrap—page 10 of the report—, the declarations concerning the production of ingots and rolled products—pages 11 and 12 of the report, etc.). But above all—and this is of conclusive importance — the explanations supplied by the applicant itself showed with absolute clarity that, during the period which concerns us, it had failed most seriously in its obligation to supply declarations. It appears from the decision of 13 November 1964 that for the period from February 1957 to November 1958 it contented itself initially with indicating a consumption of bought scrap of 1163 metric tons, so that after now producing accounting documents with the reply it has been obliged to recognize that during this period it consumed at least 10046.601 metric tons of assessable scrap, that is to say, ten times the quantity previously declared.

In these circumstances, the High Authority's application of the inductive method is undoubtedly justified.

According to our previous case-law, the only question which must consequently be asked is whether the applicant was in a position to prove afterwards, during the proceedings for example, that the results arrived at by the inductive method could not be upheld and should have been replaced by others. In this case we are concerned with books produced with the reply. Before we examine them in detail, I nevertheless wonder whether procedural reasons do not prevent our taking them into account, as the High Authority thinks, in view of the infringement of Article 42 of the Rules of Procedure. Article 42 (1) provides that:

In fact, one searches in vain for express reasons in the statement in question. Nonetheless, a charitable interpretation may perhaps allow us to consider as an implied reason the fact that the applicant refers to the brevity of the period of time for lodging applications and the fact that, when it lodged its application, the undertaking found itself in exceptional circumstances as a result of the commencement of the composition and liquidation proceedings. In any event, I do not wish in this case to propose a strict application of this principle, and on the contrary I suggest that we consider the content of the books produced and settle the question of the state of the evidence objectively.

It appears clear from the outset that two sets of books are irrelevant to the proceedings, that is, the balance sheet book and the four journals. The latter contain only amounts in lire and it is impossible—without consulting the relative documents—to ascertain what operations are discussed and what quantities of goods are concerned. Furthermore, it is clear that the balance sheet book only contains amounts in lire relating to the state of the stocks; moreover, these books are drawn up at the end of each year (1957, 1958 and 1959) and consequently do not give any indication of the movements of ferrous scrap with which the equalization scheme is concerned in the course of the various financial years. In these circumstances, all that may be taken into account is a table of the movements of stock in and out (riepilogo dei movimenti di magazzino); the applicant endeavours to deduce from this that its consumption of ferrous scrap may be assessed at the most at 10046.601 metric tons.

In my opinion certain reservations and criticisms must be made in this respect.

Thus this book, which contains only one and a half pages for 1957 and approximately two pages for 1958, only makes it possible to deduce certain aggregate figures relating to ferrous scrap acquired (8864.170 metric tons for 1957, 3884.092 and 3953.980 metric tons for 1958) and to the ferrous scrap delivered for processing within the undertaking (9046.571 metric tons for 1957, 8011.272 metric tons for 1958). On the other hand, there is no detailed statement or information on the deductions which the applicant considers should be made for certain own a risings and for ferrous scrap allegedly used in the foundry (which, moreover, does not coincide with the conclusions of the reports of the checks). For this reason I cannot accept as correct the total quantity of assessable scrap (14834.439 metric tons) calculated in the reply (p. 19), still less the calculation made in the statement of 18 November 1966 on the basis of other figures which gives a final result of 10046.601 metric tons.

A second objection, with regard to the probative value of this document, is still more important; it must first of all be noted that it contains entries made by the applicant itself the content of which has not been checked by distinguished third parties. The large number of registration stamps, initials and certifications in this book do not alter the situation. In fact, on a correct view, it is only a matter of proving the dates when the entries begin and end, or the fact that certain pages have not been changed or suppressed. I should certainly not wish to go to the length of casting doubt on the accuracy of the content of this document simply because the applicant also supplied incorrect information to the equalization scheme, that is to say, that it has manifested an evident lack of good faith. Nor would it suffice to refer to the results of the check carried out by the Fiduciaire Suisse and by the inspectors who were apparently confronted with considerable quantities of machine scrap originating from the stocks of the I.S.A.P., which had not been entered; on the basis of the production of ingots the inspectors were able to deduce a considerable consumption of ferrous scrap. What gave grounds for reflexion in the first place was the notification by the Italian authorities of the applicant's consumption of electricity, which gives a consumption of ferrous scrap of approximately 25000 metric tons, if use is made of a coefficient which until now has always been regarded as correct. We cannot ignore these figures, since we know that in Italy electricity consumption is very strictly checked by the state for fiscal reasons, giving official information in this sphere particular value as evidence.

Nor can we ignore the figures obtained through the Italian Embassy, as the applicant claims, on the ground that they are declarations carrying no authority, emanating from third parties who are not parties to the action: in fact the ECSC Treaty expressly authorizes the High Authority (Article 5) to obtain official information and obliges (Article 86) the Member States to assist the Community in attaining the objectives of the Treaty. Finally we may pass over the question raised by the applicant whether the figures quoted do not cover the total consumption of electricity by undertaking, since the communication from the Italian Embassy expressly speaks of a consumption of electricity relating to the electric furnace for the production of steel (consumi di energia elettrica inerenti ai forni elettrici per la produzione di acciaio), thus avoiding any misunderstanding.

Although, on the basis of these hgures and employing the parameter already recognized several times by the Court, one finds not only several very small divergences from the figures supplied by the applicant on its consumption of ferrous scrap, and again, when a comparison is made with these figures, an additional consumption of ferrous scrap in excess of 100 % is found, in my opinion it can only be concluded that the documents produced by the applicant must be incomplete and of no probative value. This impression is confirmed when one considers that the figures produced by the applicant coincide more or less with the calculations of the High Authority, which were made on the basis of the information obtained by the Société Fiduciaire Suisse on the applicant's consumption of electricity. Thus it appears from Schedule 1 to the statement of defence in Case 9/65 that the agents of the Société Fiduciaire Suisse saw in 1958 accounting documents which must have referred to two months, whilst according to the certificate produced with the reply, issued on 13 December 1960, for undertakings of this size (large consumers to whom electricity was supplied for purposes other than lighting, domestic use or motors) the rule was to make out monthly electricity invoices.

It is a necessary consequence of all these considerations that the applicant's efforts to prove the contrary with the aid of the documents produced must fail. We could only arrive at another conclusion if we were in possession of individual documents relating to the period in dispute: according to the declarations of the applicant's lawyer of 11 November 1966, it is probable that these documents are still in existence, at least in part, and there was all the more reason to retain them since after the checks in 1958 and in 1962 considerable differences in the consumption of ferrous scrap emerged. The Court might perhaps ask the Italian authorities whether the data notified by them in fact only cover the consumption of electricity in the applicant's electric furnace. But in view of the unequivocal terms of that communication, I dunk that a request for more detailed information may be dispensed with for the production period from February 1957 to November 1958, and I suggest that we adopt the results of the calculations made by the High Authority by the inductive method, subject to any modifications which may appear necessary as a result of the considerations set out above.

It is even more difficult to consider the period for which the applicant has not made declarations, on the ground that there was in fact no production of steel. As we have seen in the statement of facts, in 1956 the applicant acquired some of the plant which formed part of the assets of the composition of the I.S.A.P. undertaking, which had a foundry at Savigliano, for the purpose of constructing a steelworks and rolling-mill. This conversion lasted throughout 1956, so that the actual production of steel could only have started on 1 February 1957. Up to that point, apart from the conversion work, the sole work carried out was to meet orders placed with the I.S.A.P. undertaking's foundry which it had also taken over and which, as we know, are irrelevant to the equalization of ferrous scrap.

it those statements were correct, the contested decisions would in fact have to be annulled, at any rate partially, since they assume that the undertaking consumed ferrous scrap for its production of steel before 1 February 1957.

On this point also it appears that an appraisal of the evidence does not give a result favourable to the applicant. In this case too much emphasis should not be placed on the applicant's argument that during 1956 it made no purchase of scrap; this is of no importance, as the High Authority emphasizes, because for the purposes of the equalization of ferrous scrap, it is sufficient that steel has been produced from stocks of available scrap. Similarly, I shall not restrict myself to declaring improbable, as does the High Authority, the applicant's argument that it carried out work in the foundry with the available ingots of steel, since it is quite improbable that ingots, that is to say, semifinished products, were used for the foundry.

On the other hand, we must consider whether the High Authority has put forward factors rendering it very probable that the applicant commenced its steel production long before 1 February 1957. This appears to be the case. In fact it appears improbable that the conversion work in question lasted for almost one year without usable steel being produced in that period. We must not forget that the applicant undertaking was formed on 25 October 1955, that on 1 December 1955 it concluded a contract for the renting of premises for its undertaking and that consequently, from that date (or at any rate from 1 January 1956, according to the declaration which it made to the registrar of companies), it was possible to begin the conversion of the plant and not only from the middle of May, as it now claims. But the figures found by the Société Fiduciaire Suisse in connexion with the consumption of electricity are even more important than these general considerations. They show not only that a contract for the supply of electricity was concluded with effect from 1 May 1956, but again, and this thanks to an examination of the original invoices, that in May and June 1956, and especially in September and October 1956, considerable quantities of electricity were used in the applicant's furnace (during May and June 493500 kilowatt-hours, during July and August 652300 kilowatt-hours, during September and October 925500 kilowatt-hours and finally during November and December 913300 kilowatt-hours). If these figures are compared with those for 1957, which show variations of 915500 and 1332900 kilowatt-hours) and if in addition it is considered that the number of its staff scarcely changed from 1956 to 1957 (which the applicant tacitly admits) it must necessarily be concluded that, from 1956, the applicant's plant was producing steel in considerable quantity.

But, even if for the first period in dispute it were thus possible to consider as proved the fact that the applicant did not supply declarations in breach of its obligations arising from the general decisions on ferrous scrap, the admissibility in principle of the inductive method is also well established by virtue of Article 2 of Decision No 13/58 and it is for the applicant to prove the truth of its statements.

This has by no means been done. In essence the applicant merely disputes the accuracy of the figures quoted in connexion with its consumption of electricity; further, it questions whether the figures relate only to the electric furnace, although it is clear from the report of the Société Fiduciaire Suisse that very careful distinction has been drawn between the different uses for which the electricity was intended and although the applicant, if it wishes, might still prove that its doubts are well founded, by producing copies at least of its earlier electricity invoices. Nevertheless it offers to prove by the evidence of witnesses the truth of its statement that its works did not produce steel before 1 February 1957. In the past, the Court has always refused to accept proof by witnesses of facts which are more than ten years' old; it has always required documentary proof from the undertakings concerned which are in such a position. This position should be maintained in the present case.

Thus, according to the rules of evidence employed before the Court, I cannot do otherwise than acknowledge the correctness of the calculations made by the High Authority through the inductive method, and also with regard to the applicant's first production period, unless other arguments, which I shall now consider, can alter this finding.