Avis juridique important

61978J0168

European Court reports 1980 Page 00347 Greek special edition Page 00181 Swedish special edition Page 00001 Finnish special edition Page 00001

Summary

1 . TAX PROVISIONS - INTERNAL TAXES - PROVISIONS OF THE TREATY - AIM ( ECC TREATY , ART . 95 )

2 . TAX PROVISIONS - INTERNAL TAXES - PROHIBITION OF DISCRIMINATION BETWEEN IMPORTED PRODUCTS AND SIMILAR NATIONAL PRODUCTS - SIMILAR PRODUCTS - CONCEPT - INTERPRETATION - CRITERIA ( EEC TREATY , ART . 95 , FIRST PARAGRAPH )

3 . TAX PROVISIONS - INTERNAL TAXES - TAXES OF SUCH A NATURE AS TO AFFORD INDIRECT PROTECTION TO OTHER PRODUCTS - COMPETING PRODUCTS - CRITERIA ( EEC TREATY , ART . 95 , SECOND PARAGRAPH )

4 . TAX PROVISIONS - INTERNAL TAXES - GRANT OF TAX BENEFITS TO NATIONAL PRODUCTS - PERMISSIBILITY - CONDITIONS - EXTENSION TO PRODUCTS IMPORTED FROM OTHER MEMBER STATES ( EEC TREATY , ART . 95 )

5 . TAX PROVISIONS - INTERNAL TAXES - SIMILAR PRODUCTS - COMPETING PRODUCTS - CRITERIA - COMMON CUSTOMS TARIFF CLASSIFICATION - NOT A DECISIVE CRITERION ( ECC TREATY , ART . 95 , FIRST AND SECOND PARAGRAPHS )

Summary

1 . WITHIN THE SYSTEM OF THE EEC TREATY , THE PROVISIONS OF THE FIRST AND SECOND PARAGRAPHS OF ARTICLE 95 SUPPLEMENT THE PROVISIONS ON THE ABOLITION OF CUSTOMS DUTIES AND CHARGES HAVING EQUIVALENT EFFECT . THEIR AIM IS TO ENSURE FREE MOVEMENT OF GOODS BETWEEN THE MEMBER STATES IN NORMAL CONDITIONS OF COMPETITION BY THE ELIMINATION OF ALL FORMS OF PROTECTION WHICH MAY RESULT FROM THE APPLICATION OF INTERNAL TAXATION WHICH DISCRIMINATES AGAINST PRODUCTS FROM OTHER MEMBER STATES . ARTICLE 95 MUST GUARANTEE THE COMPLETE NEUTRALITY OF INTERNAL TAXATION AS REGARDS COMPETITION BETWEEN DOMESTIC PRODUCTS AND IMPORTED PRODUCTS .

2 . THE FIRST PARAGRAPH OF ARTICLE 95 MUST BE INTERPRETED WIDELY SO AS TO COVER ALL TAXATION PROCEDURES WHICH CONFLICT WITH THE PRINCIPLE OF THE EQUALITY OF TREATMENT OF DOMESTIC PRODUCTS AND IMPORTED PRODUCTS ; IT IS THEREFORE NECESSARY TO INTERPRET THE CONCEPT OF ' ' SIMILAR PRODUCTS ' ' WITH SUFFICIENT FLEXIBILITY . IT IS NECESSARY TO CONSIDER AS SIMILAR PRODUCTS WHICH HAVE SIMILAR CHARACTERISTICS AND MEET THE SAME NEEDS FROM THE POINT OF VIEW OF CONSUMERS . IT IS THEREFORE NECESSARY TO DETERMINE THE SCOPE OF THE FIRST PARAGRAPH OF ARTICLE 95 ON THE BASIS NOT OF THE CRITERION OF THE STRICTLY IDENTICAL NATURE OF THE PRODUCTS BUT ON THAT OF THEIR SIMILAR AND COMPARABLE USE .

3 . THE FUNCTION OF THE SECOND PARAGRAPH OF ARTICLE 95 IS TO COVER ALL FORMS OF INDIRECT TAX PROTECTION IN THE CASE OF PRODUCTS WHICH , WITHOUT BEING SIMILAR WITHIN THE MEANING OF THE FIRST PARAGRAPH , ARE NEVERTHELESS IN COMPETITION , EVEN PARTIAL , INDIRECT OR POTENTIAL , WITH CERTAIN PRODUCTS OF THE IMPORTING COUNTRY . FOR THE PURPOSES OF THE APPLICATION OF THAT PROVISION IT IS SUFFICIENT FOR THE IMPORTED PRODUCT TO BE IN COMPETITION WITH THE PROTECTED DOMESTIC PRODUCTION BY REASON OF ONE OR SEVERAL ECONOMIC USES TO WHICH IT MAY BE PUT , EVEN THOUGH THE CONDITION OF SIMILARITY FOR THE PURPOSES OF THE FIRST PARAGRAPH OF ARTICLE 95 IS NOT FULFILLED .

4 . WHILST THE CRITERION INDICATED IN THE FIRST PARAGRAPH OF ARTICLE 95 CONSISTS IN THE COMPARISON OF TAX BURDENS , WHETHER IN TERMS OF THE RATE , THE MODE OF ASSESSMENT OR OTHER DETAILED RULES FOR THE APPLICATION THEREOF , IN VIEW OF THE DIFFICULTY OF MAKING SUFFICIENTLY PRECISE COMPARISONS BETWEEN THE PRODUCTS IN QUESTION , THE SECOND PARAGRAPH OF THAT ARTICLE IS BASED UPON A MORE GENERAL CRITERION , IN OTHER WORDS THE PROTECTIVE NATURE OF THE SYSTEM OF INTERNAL TAXATION .

5 . WHILST COMMUNITY LAW , AS IT STANDS AT PRESENT , DOES NOT PROHIBIT CERTAIN TAX EXEMPTIONS OR TAX CONCESSIONS , IN PARTICULAR SO AS TO ENABLE PRODUCTIONS OR UNDERTAKINGS TO CONTINUE WHICH WOULD NO LONGER BE PROFITABLE WITHOUT THESE SPECIAL TAX BENEFITS BECAUSE OF THE RISE IN PRODUCTION COSTS , THE LAWFULNESS OF SUCH PRACTICES IS SUBJECT TO THE CONDITION THAT THE MEMBER STATES USING THOSE POWERS EXTEND THE BENEFIT THEREOF IN A NON-DISCRIMINATORY AND NON-PROTECTIVE MANNER TO IMPORTED PRODUCTS IN THE SAME SITUATION .

6 . THE CLASSIFICATIONS IN THE COMMON CUSTOMS TARIFF WHICH WERE DESIGNED WITH THE COMMUNITY ' S FOREIGN TRADE IN MIND , DO NOT PROVIDE CONCLUSIVE EVIDENCE AS TO WHETHER DIFFERENT PRODUCTS IN RELATION ONE TO ANOTHER ARE SIMILAR WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 OF THE EEC TREATY , OR IN COMPETITION , EVEN PARTIAL , INDIRECT OR POTENTIAL , AND SO COVERED BY THE SECOND PARAGRAPH OF THAT ARTICLE .

Parties

IN CASE 168/78

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , JEAN-CLAUDE SECHE , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ITS LEGAL ADVISER , MARIO CERVINO , JEAN MONNET BUILDING , KIRCHBERG , APPLICANT , V FRENCH REPUBLIC , REPRESENTED BY NOEL MUSEUX , ASSISTANT DIRECTOR AT THE DIRECTORATE FOR LEGAL AFFAIRS AT THE MINISTRY OF FOREIGN AFFAIRS , ACTING AS AGENT , AND PIERRE PERE , SECRETARY FOR FOREIGN AFFAIRS AT THE DIRECTORATE FOR LEGAL AFFAIRS , ACTING AS ASSISTANT AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE EMBASSY OF FRANCE , DEFENDANT ,

Subject of the case

APPLICATION FOR A DECLARATION THAT , BY APPLYING A DISCRIMINATORY TAX SYSTEM ON SPIRITS , THE FRENCH REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY ,

Grounds

1 BY APPLICATION OF 7 AUGUST 1978 THE COMMISSION BROUGHT UNDER ARTICLE 169 OF THE EEC TREATY AN ACTION FOR A DECLARATION THAT , BY APPLYING DISCRIMINATORY TAXATION ON CERTAIN SPIRITS , THE FRENCH REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 .

2 AT THE SAME TIME , THE COMMISSION SUBMITTED TO THE COURT OF JUSTICE APPLICATIONS AGAINST THE KINGDOM OF DENMARK AND THE ITALIAN REPUBLIC RELATING TO PROBLEMS OF THE SAME NATURE . THE APPLICATIONS CONTAIN , IN ALL THREE INSTANCES , CERTAIN GENERAL CONSIDERATIONS FROM WHICH IT FOLLOWS THAT THOSE APPLICATIONS FORM PART OF A GENERAL ACTION AIMING TO ENSURE THAT THE MEMBER STATES CONCERNED COMPLY WITH THE OBLIGATIONS IMPOSED ON THEM BY THE TREATY IN THIS RESPECT . IT THEREFORE SEEMS APPROPRIATE TO CLARIFY FIRST OF ALL CERTAIN QUESTIONS OF PRINCIPLE COMMON TO THE THREE CASES AS REGARDS THE INTERPRETATION OF ARTICLE 95 IN THE LIGHT OF THE SPECIAL FEATURES OF THE MARKET IN SPIRITS .

THE INTERPRETATION OF ARTICLE 95

3 UNDER THE FIRST PARAGRAPH OF ARTICLE 95 ' ' NO MEMBER STATE SHALL IMPOSE , DIRECTLY OR INDIRECTLY , ON THE PRODUCTS OF OTHER MEMBER STATES ANY INTERNAL TAXATION OF ANY KIND IN EXCESS OF THAT IMPOSED DIRECTLY OR INDIRECTLY ON SIMILAR DOMESTIC PRODUCTS ' ' . THE SECOND PARAGRAPH OF THAT ARTICLE ADDS AS FOLLOWS : ' ' FURTHERMORE , NO MEMBER STATE SHALL IMPOSE ON THE PRODUCTS OF OTHER MEMBER STATES ANY INTERNAL TAXATION OF SUCH A NATURE AS TO AFFORD INDIRECT PROTECTION TO OTHER PRODUCTS ' ' .

4 THE ABOVE-MENTIONED PROVISIONS SUPPLEMENT , WITHIN THE SYSTEM OF THE TREATY , THE PROVISIONS ON THE ABOLITION OF CUSTOMS DUTIES AND CHARGES HAVING EQUIVALENT EFFECT . THEIR AIM IS TO ENSURE FREE MOVEMENT OF GOODS BETWEEN THE MEMBER STATES IN NORMAL CONDITIONS OF COMPETITION BY THE ELIMINATION OF ALL FORMS OF PROTECTION WHICH RESULT FROM THE APPLICATION OF INTERNAL TAXATION WHICH DISCRIMINATES AGAINST PRODUCTS FROM OTHER MEMBER STATES . AS THE COMMISSION HAS CORRECTLY STATED , ARTICLE 95 MUST GUARANTEE THE COMPLETE NEUTRALITY OF INTERNAL TAXATION AS REGARDS COMPETITION BETWEEN DOMESTIC PRODUCTS AND IMPORTED PRODUCTS .

5 THE FIRST PARAGRAPH OF ARTICLE 95 , WHICH IS BASED ON A COMPARISON OF THE TAX BURDENS IMPOSED ON DOMESTIC PRODUCTS AND ON IMPORTED PRODUCTS WHICH MAY BE CLASSIFIED AS ' ' SIMILAR ' ' , IS THE BASIC RULE IN THIS RESPECT . THIS PROVISION , AS THE COURT HAS HAD OCCASION TO EMPHASIZE IN ITS JUDGMENT OF 10 OCTOBER 1978 IN CASE 148/77 , H . HANSEN JUN . & O . C . BALLE GMBH & CO . V HAUPTZOLLAMT FLENSBURG ( 1978 ) ECR 1787 , MUST BE INTERPRETED WIDELY SO AS TO COVER ALL TAXATION PROCEDURES WHICH CONFLICT WITH THE PRINCIPLE OF THE EQUALITY OF TREATMENT OF DOMESTIC PRODUCTS AND IMPORTED PRODUCTS ; IT IS THEREFORE NECESSARY TO INTERPRET THE CONCEPT OF ' ' SIMILAR PRODUCTS ' ' WITH SUFFICIENT FLEXIBILITY . THE COURT SPECIFIED IN THE JUDGMENT OF 17 FEBRUARY 1976 IN THE REWE CASE ( CASE 45/75 ( 1976 ) ECR 181 ) THAT IT IS NECESSARY TO CONSIDER AS SIMILAR PRODUCTS WHICH ' ' HAVE SIMILAR CHARACTERISTICS AND MEET THE SAME NEEDS FROM THE POINT OF VIEW OF CONSUMERS ' ' . IT IS THEREFORE NECESSARY TO DETERMINE THE SCOPE OF THE FIRST PARAGRAPH OF ARTICLE 95 ON THE BASIS NOT OF THE CRITERION OF THE STRICTLY IDENTICAL NATURE OF THE PRODUCTS BUT ON THAT OF THEIR SIMILAR AND COMPARABLE USE .

6 THE FUNCTION OF THE SECOND PARAGRAPH OF ARTICLE 95 IS TO COVER , IN ADDITION , ALL FORMS OF INDIRECT TAX PROTECTION IN THE CASE OF PRODUCTS WHICH , WITHOUT BEING SIMILAR WITHIN THE MEANING OF THE FIRST PARAGRAPH , ARE NEVERTHELESS IN COMPETITION , EVEN PARTIAL , INDIRECT OR POTENTIAL , WITH CERTAIN PRODUCTS OF THE IMPORTING COUNTRY . THE COURT HAS ALREADY EMPHASIZED CERTAIN ASPECTS OF THAT PROVISION IN ITS JUDGMENT OF 4 APRIL 1978 IN CASE 27/77 , FIRMA FINK-FRUCHT GMBH V HAUPTZOLLAMT MUNCHEN-LANDSBERGERSTRASSE ( 1978 ) ECR 223 , IN WHICH IT STATED THAT FOR THE PURPOSES OF THE APPLICATION OF THE FIRST PARAGRAPH OF ARTICLE 95 IT IS SUFFICIENT FOR THE IMPORTED PRODUCT TO BE IN COMPETITION WITH THE PROTECTED DOMESTIC PRODUCTION BY REASON OF ONE OR SEVERAL ECONOMIC USES TO WHICH IT MAY BE PUT , EVEN THOUGH THE CONDITION OF SIMILARITY FOR THE PURPOSES OF THE FIRST PARAGRAPH OF ARTICLE 95 IS NOT FULFILLED .

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

or

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

3. A description of any likely significant effects, to the extent of the information available on such effects, of the project on the environment resulting from:

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

4. The criteria of Annex III shall be taken into account, where relevant, when compiling the information in accordance with points 1 to 3.’

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

must be interpreted as meaning that where, in the context of a screening procedure carried out under that provision, a third party has provided the competent authority with objective evidence as regards the potential significant effects of that project on the environment, in particular on a species protected under Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora, as amended by Council Directive 2013/17/EU of 13 May 2013, that authority must ask the developer to provide it with additional information and take that information into account before deciding whether or not an environmental impact assessment is necessary for that project. However, where, despite the observations submitted to that authority by a third party, the competent authority is able to rule out, on the basis of objective evidence, the possibility that the project in question is likely to have significant effects on the environment, that authority may decide that an environmental impact assessment is not necessary, without being required to ask the developer to provide it with additional information.

Gratsias

Passer

Smulders

Delivered in open court in Luxembourg on 6 March 2025.

Registrar

President of the Chamber

ECLI:EU:C:2025:140

15

( A )IT IS IMPOSSIBLE , FIRST OF ALL , TO DISREGARD THE FACT THAT ALL THE PRODUCTS IN QUESTION , WHATEVER THEIR SPECIFIC CHARACTERISTICS IN OTHER RESPECTS , HAVE COMMON GENERIC FEATURES . ALL ARE THE OUTCOME OF THE DISTILLATION PROCEDURE ; ALL CONTAIN , AS A PRINCIPAL CHARACTERISTIC INGREDIENT , ALCOHOL SUITABLE FOR HUMAN CONSUMPTION AT A RELATIVELY HIGH DEGREE OF CONCENTRATION . IT FOLLOWS THAT WITHIN THE LARGEST GROUP OF ALCOHOLIC BEVERAGES SPIRITS FORM AN IDENTIFIABLE WHOLE UNITED BY COMMON CHARACTERISTICS ;

( B)IN SPITE OF THOSE COMMON CHARACTERISTICS , IT IS POSSIBLE TO DISTINGUISH WITHIN THAT WHOLE PRODUCTS WHICH HAVE THEIR OWN MORE OR LESS PRONOUNCED CHARACTERISTICS . THOSE CHARACTERISTICS SPRING EITHER FROM THE RAW MATERIALS USED ( IN THIS CONNEXION IT IS POSSIBLE TO DISTINGUISH IN PARTICULAR SPIRITS DISTILLED FROM WINE , FRUIT , CEREALS AND SUGAR-CANE ), OR FROM MANUFACTURING PROCESSES OR , AGAIN , FROM THE FLAVOURINGS ADDED . TYPICAL VARIETIES OF SPIRITS MAY IN FACT BE DEFINED BY THESE PARTICULAR CHARACTERISTICS , SO MUCH SO THAT SOME OF THEM ARE EVEN PROTECTED BY REGISTERED DESIGNATIONS OF ORIGIN ;

( C)AT THE SAME TIME , IT IS IMPOSSIBLE TO DISREGARD THE FACT THAT THERE ARE , IN THE CASE OF SPIRITS , IN ADDITION TO WELL-DEFINED PRODUCTS WHICH ARE PUT TO RELATIVELY SPECIFIC USES , OTHER PRODUCTS WITH LESS DISTINCT CHARACTERISTICS AND WIDER USES . THERE ARE , ON THE ONE HAND , NUMEROUS PRODUCTS DERIVED FROM WHAT ARE KNOWN AS ' ' NEUTRAL ' ' SPIRITS , IN OTHER WORDS SPIRITS OF ALL ORIGINS INCLUDING MOLASSES ALCOHOL AND POTATO ALCOHOL ; THESE PRODUCTS OWE THEIR INDIVIDUALITY ONLY TO FLAVOURING ADDITIVES WITH A MORE OR LESS PRONOUNCED TASTE . ON THE OTHER HAND , IT IS NECESSARY TO DRAW ATTENTION TO THE FACT THAT IN THE CASE OF SPIRITS THERE ARE PRODUCTS WHICH MAY BE CONSUMED IN VERY DIFFERENT FORMS , EITHER NEAT OR DILUTED OR , AGAIN , IN THE FORM OF MIXTURES . THESE PRODUCTS MAY THEREFORE BE IN COMPETITION WITH A RANGE OF VARYING SIZE OF OTHER ALCOHOLIC PRODUCTS OF MORE LIMITED USE . A CHARACTERISTIC OF THE THREE CASES BROUGHT BEFORE THIS COURT IS HOWEVER THE FACT THAT IN EACH THERE ARE , IN ADDITION TO WELL-DEFINED SPIRITS , ONE OR SEVERAL PRODUCTS WITH A BROAD RANGE OF USES .

12 TWO CONCLUSIONS FOLLOW FROM THIS ANALYSIS OF THE MARKET IN SPIRITS . FIRST , THERE IS , IN THE CASE OF SPIRITS CONSIDERED AS A WHOLE , AN INDETERMINATE NUMBER OF BEVERAGES WHICH MUST BE CLASSIFIED AS ' ' SIMILAR PRODUCTS ' ' WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 , ALTHOUGH IT MAY BE DIFFICULT TO DECIDE THIS IN SPECIFIC CASES , IN VIEW OF THE NATURE OF THE FACTORS IMPLIED BY DISTINGUISHING CRITERIA SUCH AS FLAVOUR AND CONSUMER HABITS . SECONDLY , EVEN IN CASES IN WHICH IT IS IMPOSSIBLE TO RECOGNIZE A SUFFICIENT DEGREE OF SIMILARITY BETWEEN THE PRODUCTS CONCERNED , THERE ARE NEVERTHELESS , IN THE CASE OF ALL SPIRITS , COMMON CHARACTERISTICS WHICH ARE SUFFICIENTLY PRONOUNCED TO ACCEPT THAT IN ALL CASES THERE IS AT LEAST PARTIAL OR POTENTIAL COMPETITION . IT FOLLOWS THAT THE APPLICATION OF THE SECOND PARAGRAPH OF ARTICLE 95 MAY COME INTO CONSIDERATION IN CASES IN WHICH THE RELATIONSHIP OF SIMILARITY BETWEEN THE SPECIFIC VARIETIES OF SPIRITS REMAINS DOUBTFUL OR CONTESTED .

13 IT APPEARS FROM THE FOREGOING THAT ARTICLE 95 , TAKEN AS A WHOLE , MAY APPLY WITHOUT DISTINCTION TO ALL THE PRODUCTS CONCERNED . IT IS SUFFICIENT THEREFORE TO EXAMINE WHETHER THE APPLICATION OF A GIVEN NATIONAL TAX SYSTEM IS DISCRIMINATORY OR , AS THE CASE MAY BE , PROTECTIVE , IN OTHER WORDS WHETHER THERE IS A DIFFERENCE IN THE RATE OR THE DETAILED RULES FOR LEVYING THE TAX AND WHETHER THAT DIFFERENCE IS LIKELY TO FAVOUR A GIVEN DOMESTIC PRODUCTION . IT WILL BE NECESSARY TO EXAMINE WITHIN THIS FRAMEWORK THE ECONOMIC RELATIONSHIPS BETWEEN THE PRODUCTS CONCERNED AND THE CHARACTERISTICS OF THE TAX SYSTEMS WHICH FORM THE SUBJECT-MATTER OF THE DISPUTES IN THE CASE OF EACH OF THE APPLICATIONS LODGED BY THE COMMISSION .

14 IN THE VARIOUS PROCEDURES , THE PARTIES HAVE RELIED , WITH REGARD TO THE DISTINCTION BETWEEN SEVERAL CATEGORIES OF ALCOHOLIC PRODUCT , UPON CERTAIN STATEMENTS MADE BY THE COURT OF JUSTICE IN THE JUDGMENT IN THE HANSEN & BALLE CASE , SUPRA , WHICH WAS DELIVERED AT A TIME WHEN THESE APPLICATIONS WERE PENDING . REFERENCE HAS BEEN MADE MORE PARTICULARLY TO A PASSAGE IN THAT JUDGMENT WHICH STATES AS FOLLOWS : ' ' AT THE PRESENT STAGE OF ITS DEVELOPMENT AND IN THE ABSENCE OF ANY UNIFICATION OR HARMONIZATION OF THE RELEVANT PROVISIONS , COMMUNITY LAW DOES NOT PROHIBIT MEMBER STATES FROM GRANTING TAX ADVANTAGES , IN THE FORM OF EXEMPTION FROM OR REDUCTION OF DUTIES , TO CERTAIN TYPES OF SPIRITS OR TO CERTAIN CLASSES OF PRODUCERS . INDEED , TAX ADVANTAGES OF THIS KIND MAY SERVE LEGITIMATE ECONOMIC OR SOCIAL PURPOSES , SUCH AS THE USE OF CERTAIN RAW MATERIALS BY THE DISTILLING INDUSTRY , THE CONTINUED PRODUCTION OF PARTICULAR SPIRITS OF HIGH QUALITY , OR THE CONTINUANCE OF CERTAIN CLASSES OF UNDERTAKINGS SUCH AS AGRICULTURAL DISTILLERIES ' ' .

15 SINCE CERTAIN OF THE DEFENDANT GOVERNMENTS HAVE RELIED UPON THESE STATEMENTS IN ORDER TO JUSTIFY THEIR TAX SYSTEM , THE COURT HAS ASKED THE COMMISSION QUESTIONS AS TO THE COMPATIBILITY WITH COMMUNITY LAW OF THE DIFFERENCES IN THE RATES OF TAX APPLIED TO VARIOUS CATEGORIES OF ALCOHOLIC BEVERAGES AND AS TO ITS INTENTIONS IN THAT RESPECT WITHIN THE CONTEXT OF THE HARMONIZATION OF TAX LEGISLATION . THE COMMISSION , AFTER RE-STATING ITS VIEW THAT ALL SPIRITS ARE SIMILAR AND ITS INTENTION TO PROPOSE THE INTRODUCTION , AT LEAST IN PRINCIPLE , OF A SINGLE RATE OF TAX IN FUTURE COMMUNITY REGULATIONS , DRAWS ATTENTION TO THE FACT THAT THE PROBLEMS LINKED TO THE USE OF CERTAIN RAW MATERIALS , CONTINUED HIGH-QUALITY PRODUCTION AND THE ECONOMIC STRUCTURE OF MANUFACTURING UNDERTAKINGS TO WHICH THE COURT REFERRED IN THE ABOVE-MENTIONED JUDGMENT MAY BE RESOLVED BY MEANS OF AID TO PRODUCERS OR SYSTEMS OF COMPENSATION BETWEEN PRODUCERS , TAKING INTO ACCOUNT THE DIFFERENCE IN THE COST OF THE RAW MATERIALS USED . IT DRAWS ATTENTION TO THE FACT THAT THIS OBJECTIVE HAS ALREADY BEEN ATTAINED WITHIN THE CONTEXT OF THE COMMON ORGANIZATION OF THE MARKET IN WINE AS REGARDS SPIRITS OBTAINED BY DISTILLING WINE . ACCORDING TO THE COMMISSION , SUCH MECHANISMS MIGHT SAFEGUARD THE MARKETING CHANCES OF CERTAIN PRODUCTS WHICH ARE HANDICAPPED BY PRODUCTION COSTS , WITHOUT ITS BEING NECESSARY TO HAVE RECOURSE FOR THIS PURPOSE TO THE PROCEDURE OF VARIATION IN THE RATES OF TAX .

16 IN VIEW OF THESE OBSERVATIONS , THE COURT POINTS OUT THAT ALTHOUGH IT ACKNOWLEDGED IN THE JUDGMENT IN THE HANSEN & BALLE CASE , TAKING INTO ACCOUNT THE STATE OF DEVELOPMENT OF COMMUNITY LAW , THAT CERTAIN TAX EXEMPTIONS OR TAX CONCESSIONS ARE LAWFUL , THIS IS ON CONDITION THAT THE MEMBER STATES USING THOSE POWERS EXTEND THE BENEFIT THEREOF WITHOUT DISCRIMINATION TO IMPORTED PRODUCTS IN THE SAME CONDITIONS . IT IS NECESSARY TO EMPHASIZE THAT IT WAS ACKNOWLEDGED THAT THOSE PRACTICES WERE LAWFUL IN PARTICULAR SO AS TO ENABLE PRODUCTIONS OR UNDERTAKINGS TO CONTINUE WHICH WOULD NO LONGER BE PROFITABLE WITHOUT THESE SPECIAL TAX BENEFITS BECAUSE OF THE RISE IN PRODUCTION COSTS . ON THE OTHER HAND , THE CONSIDERATIONS EXPRESSED IN THAT JUDGMENT CANNOT BE UNDERSTOOD AS LEGITIMATING TAX DIFFERENCES WHICH ARE DISCRIMINATORY OR PROTECTIVE .

THE SUBJECT-MATTER AND THE BACKGROUND OF THE DISPUTE IN QUESTION

17 THE TERMS IN WHICH THE COMMISSION BROUGHT ITS ACTION AGAINST THE FRENCH REPUBLIC CALL FOR CERTAIN PRELIMINARY OBSERVATIONS CONCERNING THE SUBJECT-MATTER OF THE DISPUTE . WHEREAS , ACCORDING TO THE CONCLUSIONS CONTAINED IN THE APPLICATION , THE COMMISSION ASKS THE COURT FOR A DECLARATION THAT THE FRENCH REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY ' ' BY APPLYING A DISCRIMINATORY TAX SYSTEM ON SPIRITS ' ' , IT APPEARS FROM THE WORDING ITSELF OF THE APPLICATION AND FROM SUBSEQUENT DEVELOPMENTS IN THE CASE THAT THE APPLICATION IN FACT CONCERNS ONLY CERTAIN ELEMENTS OF THE FRENCH LEGISLATION THEREON , IN OTHER WORDS THE DISCRIMINATORY TAXATION IMPOSED ON GENEVA AND OTHER ALCOHOLIC BEVERAGES RESULTING FROM THE DISTILLATION OF CEREALS ON THE ONE HAND AND ON SPIRITS OBTAINED FROM WINE AND FRUIT ON THE OTHER . MORE SPECIFICALLY , THE COMMISSION REFERS ABOVE ALL TO THE DIFFERENCE IN THE TAXATION ON TWO TYPICAL AND WELL-KNOWN PRODUCTS , WHISKY AND COGNAC .

18 THE FRENCH GOVERNMENT CONTESTED THIS WAY OF PUTTING THE PROBLEM WHEN , THEY CLAIM , THE CATEGORIES OF TAXATION ADOPTED BY THE COMMISSION DO NOT CORRESPOND EITHER TO THE TERMINOLOGY OF THE FRENCH LEGISLATION OR TO FRENCH TAX PRACTICE .

19 THIS PRELIMINARY OBJECTION RAISED BY THE FRENCH GOVERNMENT IS JUSTIFIED . IT IS NECESSARY THEREFORE TO RECALL THE WORDING OF THE PROVISIONS AT ISSUE IN THE COMMISSION ' S APPLICATION , IN OTHER WORDS ARTICLES 403 AND 406 OF THE CODE GENERAL DES IMPOTS ( GENERAL TAXATION CODE ), SO AS TO ASCERTAIN THE SUBJECT-MATTER OF THE DISPUTE IN TERMS ADAPTED TO THE STATE OF FRENCH LEGISLATION . THIS LEGISLATION IS SUBJECT TO ANNUAL AMENDMENTS THROUGH SUCCESSIVE FINANCE LEGISLATION , SO THAT IT IS QUOTED HEREINAFTER IN THE STATE IN WHICH IT WAS AT THE DATE OF THE HEARING BY THE COURT .

20 UNDER ARTICLE 403 OF THE CODE GENERAL DES IMPOTS , ALL SPIRITS ARE SUBJECT TO A ' ' PURCHASE TAX ' ' THE RATE OF WHICH IS FIXED PER HECTOLITRE OF PURE ALCOHOL . THE AMOUNTS ARE FIXED BY THE SAME ARTICLE , FIRST OF ALL FOR CERTAIN NAMED PRODUCTS ( NONE OF WHICH IS AT ISSUE IN THIS PROCEDURE ) THEN FOR ' ' ALL OTHER PRODUCTS ' ' . THE RATE FIXED FOR THIS GENERAL CATEGORY IS FF 4 270 PER HECTOLITRE .

21 ACCORDING TO ARTICLE 406 OF THE SAME CODE , CERTAIN ALCOHOLIC PRODUCTS ARE SUBJECT IN ADDITION TO A ' ' MANUFACTURING TAX ' ' , THE RATE OF WHICH IS FIXED AT THE FOLLOWING AMOUNTS PER HECTOLITRE OF PURE ALCOHOL :

- FF 2 110 ' ' FOR ALCOHOLIC BEVERAGES RESULTING FROM THE DISTILLATION OF CEREALS AND SPIRITS SOLD UNDER THE SAME NAME AS THOSE BEVERAGES , EXCEPT GENEVAS ' ' ; AND

- FF 710 ' ' FOR ALL OTHER ALCOHOL-BASED BEVERAGES WHICH ARE CAPABLE OF BEING CONSUMED AS APERITIFS AND FOR WINE-BASED APERITIFS , VERMOUTH , LIQUEUR WINES AND WINES TREATED AS SUCH WHICH DO NOT BENEFIT FROM A REGISTERED DESIGNATION OF ORIGIN , AND NATURAL SWEET WINES SUBJECT TO THE TAX SYSTEM APPLICABLE TO SPIRITS AND GENEVAS ' ' .

22 IT FOLLOWS FROM THE FOREGOING THAT ALTHOUGH ALL SPIRITS INCLUDING SPIRITS OBTAINED FROM WINE AND FRUIT ARE SUBJECT UNIFORMLY TO THE SAME ' ' PURCHASE TAX ' ' , GENEVA AND OTHER SPIRITS OBTAINED FROM CEREALS ARE IN ADDITION SUBJECT TO THE ' ' MANUFACTURING TAX ' ' .

23 IT THEREFORE SEEMS THAT THE COMMISSION ' S APPLICATION CONCERNS ONLY THREE TYPES OF PRODUCT WHICH , ALBEIT BOTH IMPORTANT AND REPRESENTATIVE , FAR FROM EXHAUST THE WHOLE RANGE OF ALCOHOL PRODUCTS REFERRED TO BY THE TAX CODE . IN PARTICULAR , AS THE FRENCH GOVERNMENT POINTED OUT , THE APPLICATION COVERS NEITHER ' ' ANISE SPIRITS ' ' , THE TREATMENT FOR TAX PURPOSES OF WHICH IS EQUIVALENT TO THAT OF ALCOHOLIC BEVERAGES RESULTING FROM THE DISTILLATION OF CEREALS , NOR THE CATEGORY OF ' ' APERITIF ' ' WHICH IS SUBJECT TO THE SAME SYSTEM AS GENEVAS .

24 ALTHOUGH IT MAY HAVE SEEMED MORE APPROPRIATE TO EXAMINE THE SYSTEM OF TAXATION ON ALCOHOLIC BEVERAGES IN FRANCE AS A WHOLE , IN PARTICULAR SO AS TO BE ABLE TO APPRAISE FROM A GENERAL POINT OF VIEW THE QUESTION OF THE SIMILARITY OF THE VARIOUS PRODUCTS , IT IS HOWEVER IMPOSSIBLE TO CONTEST THE OBJECTIVITY OF THE COMMISSION ' S PRESENTATION OF THE FACTS OF THE CASE AS REGARDS THE TREATMENT FOR TAX PURPOSES APPLIED TO THE THREE CATEGORIES OF PRODUCTS WHICH IT CHOSE TO ADOPT , IN OTHER WORDS SPIRITS OBTAINED FROM CEREALS , GENEVA AND SPIRITS OBTAINED FROM WINE AND FRUIT .

25 IT FOLLOWS FROM THIS THAT ALL THE ALCOHOLIC BEVERAGES REFERRED TO BY THE COMMISSION ARE UNIFORMLY SUBJECT TO THE SAME PURCHASE TAX BUT THAT GENEVAS AND OTHER ALCOHOLIC BEVERAGES RESULTING FROM THE DISTILLATION OF CEREALS ARE SUBJECT IN ADDITION TO A MANUFACTURING TAX WHICH IS NOT APPLICABLE TO SPIRITS DERIVED FROM WINE AND FRUIT . IT IS ALSO NOT CONTESTED THAT THERE IS NO SIGNIFICANT PRODUCTION OF GENEVA AND OTHER SPIRITS OBTAINED FROM CEREALS IN FRANCE . THE COMMISSION CONSIDERS , IN THESE CIRCUMSTANCES , THAT THE TAX SYSTEM IS CONTRARY TO THE PROVISIONS OF ARTICLE 95 IN THAT IT GIVES A TAX ADVANTAGE TO CERTAIN SPIRITS PRODUCED IN FRANCE WHEREAS SIMILAR OR COMPETING PRODUCTS IMPORTED FROM OTHER MEMBER STATES ARE SUBJECT TO AN ADDITIONAL TAX .

26 THE FRENCH GOVERNMENT PUTS FORWARD TWO LINES OF ARGUMENT FOR THE PURPOSE OF DEFENDING THE TAX SYSTEM COMPLAINED OF :

- FIRST , IT CONTESTS THAT THE PRODUCTS REFERRED TO IN THE APPLICATION ARE SIMILAR WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 ;

- MOREOVER , IT CONTESTS THAT THERE IS BETWEEN THOSE PRODUCTS SUFFICIENTLY MARKED COMPETITION TO JUSTIFY THE APPLICATION OF THE SECOND PARAGRAPH OF ARTICLE 95 .

27 IN THE OPINION OF THE FRENCH GOVERNMENT , THE CLASSIFICATIONS LAID DOWN BY FRENCH LEGISLATION AND TAX PRACTICE ARE THEREFORE JUSTIFIED FROM THE POINT OF VIEW OF THE TREATY AND THE FIXING OF DIFFERENT RATES OF TAX FOR THE VARIOUS CATEGORIES CANNOT BE CRITICIZED FROM THE POINT OF VIEW OF THE REQUIREMENTS FLOWING FROM ARTICLE 95 .

THE APPLICATION OF THE CONTESTED TAX SYSTEM

28 IN ACCORDANCE WITH THE VIEWPOINT RECALLED ABOVE , THE COMMISSION CONSIDERS THAT ALL THE SPIRITS IN QUESTION ARE ' ' SIMILAR ' ' PRODUCTS WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 . THE DETAILED RULES ON TAXATION APPLIED UNDER THE FRENCH TAX LEGISLATION ARE THEREFORE INCOMPATIBLE WITH THE PROHIBITION AGAINST DISCRIMINATION LAID DOWN IN THE FIRST PARAGRAPH OF ARTICLE 95 . THE COMMISSION CONSIDERS THAT THE CUSTOMS CLASSIFICATION OF THE PRODUCTS IN QUESTION , WHICH ARE ALL GROUPED UNDER ' ' SPIRITUOUS BEVERAGES ' ' IN TARIFF SUBHEADING 22.09 C OF THE COMMON CUSTOMS TARIFF AND COVERED IN A COMMON DEFINITION BY THE RELEVANT EXPLANATORY NOTE TO THE BRUSSELS NOMENCLATURE , SUPPORTS ITS ARGUMENT . THAT NOTE IN FACT DESCRIBES AS ' ' SPIRITS ' ' PRODUCTS OBTAINED ' ' BY DISTILLING WINE , CIDER OR OTHER FERMENTED BEVERAGES OR FERMENTED GRAIN OR OTHER VEGETABLE PRODUCTS ' ' . THE COMMISSION RECALLS MOREOVER THE TERMS IN WHICH THE COURT OF JUSTICE DEFINED THE CONCEPT OF SIMILARITY IN ITS JUDGMENT IN THE ABOVE-MENTIONED REWE CASE .

29 FROM THE POINT OF VIEW OF THE SECOND PARAGRAPH OF ARTICLE 95 , THE COMMISSION OBSERVES THAT THE FRENCH TAX SYSTEM IS ADJUSTED SO AS TO PLACE AT A DISADVANTAGE SPIRITS OBTAINED FROM CEREALS WHICH ARE ALMOST EXCLUSIVELY IMPORTED FROM OTHER MEMBER STATES , WHEREAS DOMESTIC PRODUCTION OF THOSE PRODUCTS IS INSIGNIFICANT . ON THE OTHER HAND , THE MAIN DOMESTIC PRODUCT , IN OTHER WORDS SPIRITS OBTAINED FROM WINE AND FRUIT , ARE FAVOURED IN THAT THEY ARE NOT SUBJECT TO THE PAYMENT OF THE ' ' MANUFACTURING TAX ' ' . IT THUS SEEMS THAT THIS TAX SYSTEM , EVEN IF IT WERE NECESSARY TO STATE THAT SPIRITS OBTAINED FROM WINE AND FRUIT ON THE ONE HAND AND SPIRITS OBTAINED FROM CEREALS ON THE OTHER ARE NOT SIMILAR , IS OF SUCH A NATURE AS TO AFFORD AN INDIRECT COMPETITIVE ADVANTAGE TO NATIONAL PRODUCTION .

30 THE FRENCH GOVERNMENT , FOR ITS PART , STATES THAT IN THE ABSENCE OF A DEFINITION OF THE CONCEPT OF SIMILARITY IN THE TREATY AND PENDING HARMONIZATION AT THE COMMUNITY LEVEL , THE NATIONAL AUTHORITIES HAVE THE POWER TO MAKE A TAX CLASSIFICATION SUBJECT , OF COURSE , TO COMPLIANCE WITH THE OBLIGATIONS FLOWING FROM ARTICLE 95 . IT CONSIDERS THAT THE EFFECTS OF THE CLASSIFICATION MADE BY THE FRENCH TAX LEGISLATION ARE COMPATIBLE WITH THOSE REQUIREMENTS .

31 AS REGARDS THE INDICATIONS WHICH MAY BE DEDUCED FROM THE COMMON CUSTOMS TARIFF , THE FRENCH GOVERNMENT DRAWS ATTENTION TO THE FACT THAT TARIFF HEADING 22.09 C IN ITS TURN CONTAINS SUBDIVISIONS THE EFFECT OF WHICH IS TO TREAT DIFFERENTLY PRODUCTS SUCH AS GIN AND WHISKY ON THE ONE HAND AND ' ' OTHER ' ' SPIRITUOUS BEVERAGES , INCLUDING SPIRITS OBTAINED FROM WINE AND FRUIT , ON THE OTHER . THE CLASSIFICATION LAID DOWN BY THE COMMON CUSTOMS TARIFF THEREFORE RATHER SUPPORTS THE OPINION THAT SPIRITS ARE NOT ALL SIMILAR PRODUCTS .

32 AS REGARDS THE CRITERIA WHICH MAY BE USED FOR THE CLASSIFICATION OF THE PRODUCTS , THE FRENCH GOVERNMENT CONSIDERS THAT IT IS THE ' ' FLAVOUR ' ' OF THE DISTILLATE , IN OTHER WORDS , A NUMBER OF ORGANOLEPTIC PROPERTIES COMBINING TASTE , AROMA AND SMELL , WHICH , FROM THE POINT OF VIEW OF SATISFYING THE NEEDS OF THE CONSUMER , FORMS THE BASIS OF THE CLASSIFICATION OF PRODUCTS WHICH ARE NEITHER SIMILAR NOR EVEN INTERCHANGEABLE OR COMPETING WITHIN ARTICLE 95 . THE RELEVANCE OF THAT CRITERION HAS BEEN EXPRESSLY ACKNOWLEDGED , IT CLAIMS , IN THE JUDGMENT OF 29 MAY 1974 IN CASE 185/73 , HAUPTZOLLAMT BIELEFELD V OFFENE HANDELSGESELLSCHAFT IN FIRMA H . C . KONIG ( 1974 ) ECR 607 , IN WHICH IN ORDER TO DISTINGUISH BETWEEN TARIFF SUBHEADING 22.09 A ( ETHYL ALCOHOL ) AND TARIFF SUBHEADING 22.09 C V ( OTHER SPIRITUOUS BEVERAGES ), THE COURT REFERRED TO THE PRESENCE IN SPIRITUOUS BEVERAGES ' ' OF FLAVOURING SUBSTANCES OR DISTINCTIVE PROPERTIES OF TASTE ' ' .

33 MORE PARTICULARLY , THE DEFENDANT GOVERNMENT STATES THAT THE FRENCH TAX LEGISLATION IS BASED ON THE DISTINCTION BETWEEN ' ' DIGESTIVES ' ' ON THE ONE HAND , IN OTHER WORDS BEVERAGES CONSUMED AT THE END OF THE MEAL INCLUDING IN PARTICULAR SPIRITS OBTAINED FROM THE DISTILLATION OF WINE AND FRUIT , SUCH AS COGNAC , ARMAGNAC AND CALVADOS , AND ' ' APERITIFS ' ' ON THE OTHER , WHICH ARE BEVERAGES DRUNK BEFORE MEALS INCLUDING ABOVE ALL GRAIN-BASED SPIRITS , MOST FREQUENTLY CONSUMED DILUTED WITH WATER , SUCH AS WHISKY , GIN AND ANISEED SPIRITS . AS REGARDS THE LATTER CATEGORY OF BEVERAGES , THE FRENCH GOVERNMENT POINTS OUT THAT ALTHOUGH THIS IS A TYPICALLY FRENCH PRODUCT IT IS SUBJECT TO THE ' ' MANUFACTURING TAX ' ' IN THE SAME WAY AS SPIRITS OBTAINED FROM CEREALS SO THAT IT IS IMPOSSIBLE TO SPEAK IN THIS RESPECT OF DISCRIMINATORY TREATMENT . IN THE SAME CONTEXT , THE FRENCH GOVERNMENT DRAWS ATTENTION IN ADDITION TO THE FACT THAT , FROM THE TAX POINT OF VIEW ALSO REGISTERED DESIGNATIONS OF ORIGIN , OF WHICH THE COMMISSION TOOK NO ACCOUNT AT ALL IN LODGING ITS APPLICATION , FORM AN IDENTIFYING CRITERION .

34 AS REGARDS THE APPLICATION OF THE SECOND PARAGRAPH OF ARTICLE 95 , THE FRENCH GOVERNMENT CLAIMS THAT THERE IS NO COMPETITION BETWEEN THE PRODUCTS COMING WITHIN BOTH TAX CATEGORIES LAID DOWN BY THE FRENCH LEGISLATION SO THAT THERE CANNOT BE A SHIFT IN CONSUMPTION FROM ONE CATEGORY OF SPIRITS TO ANOTHER AS THE RESULT OF A DIFFERENCE IN TAXATION . TRUE COMPETITION EXISTS BETWEEN WHISKY AND ANISEED SPIRITS WHICH IN FACT COME WITHIN THE SAME TAX CATEGORY . THE SYSTEM CONTESTED BY THE COMMISSION HAS , MOREOVER , HAD NO PROTECTIVE EFFECT AS SHOWN , ACCORDING TO THE FRENCH GOVERNMENT , BY THE COMPARATIVE STATISTICS ON THE CONSUMPTION OF COGNAC AND WHISKY IN FRANCE FROM WHICH IT IS CLEAR THAT ALTHOUGH THE CONSUMPTION OF COGNAC INCREASED ONLY MODERATELY IN THE PERIOD FROM 1963 TO 1977 ( FROM 33 361 HECTOLITRES TO 44 745 HECTOLITRES ), THE CONSUMPTION OF WHISKY INCREASED SPECTACULARLY DURING THE SAME PERIOD ( FROM 34 104 HECTOLITRES TO 117 379 HECTOLITRES ).

35 THE ARGUMENTS BASED BY THE PARTIES ON THE WORDING OF TARIFF SUBHEADING 22.09 C CANNOT , IN THIS CASE , PROVIDE A CONCLUSIVE INDICATION . IT IS TRUE THAT THIS SUBHEADING COVERS ALL SPIRITS IN THE SAME GENERAL CATEGORY UNDER THE NAME OF ' ' SPIRITUOUS BEVERAGES ' ' . IN ITS TURN , IT CONTAINS SEVERAL SUBDIVISIONS ( RUM , GIN , WHISKY AND VODKA ), FOLLOWED BY A RESIDUAL CATEGORY COVERING THE ' ' OTHER ' ' SPIRITUOUS BEVERAGES . THESE SUBDIVISIONS , WHICH WERE DESIGNED WITH COMMUNITY FOREIGN TRADE IN MIND , CANNOT HOWEVER CONSTITUTE AN APPROPRIATE CLASSIFICATION FROM THE POINT OF VIEW OF THE APPLICATION TO THE PRESENT CASE OF ARTICLE 95 OF THE TREATY , ESPECIALLY SINCE THE FRENCH CODE GENERAL DES IMPOTS IS BASED ON A SYSTEM OF CLASSIFICATION WHICH IS ENTIRELY DIFFERENT FROM THAT OF THE COMMON CUSTOMS TARIFF . NOR , FINALLY , CAN AN ARGUMENT BE BASED ON THE JUDGMENT OF THE COURT IN THE HAUPTZOLLAMT BIELEFELD V OFFENE HANDELSGESELLSCHAFT IN FIRMA H . C . KONIG CASE SINCE THAT CASE INVOLVED MAKING A GENERAL DISTINCTION BETWEEN SPIRITS , GROUPED TOGETHER IN TARIFF SUBHEADING 22.09 C , AND PURE ETHYL ALCOHOL , WHICH COMES WITHIN TARIFF SUBHEADING 22.09 A . THIS JUDGMENT THEREFORE PROVIDES NO INDICATIONS AS TO THE SCOPE OF ANY CLASSIFICATIONS WITHIN SPIRITS AS A WHOLE .

36 NOR DOES THE COURT THINK IT IS POSSIBLE TO ADOPT AS A RELEVANT CLASSIFICATION THE DISTINCTION ADVOCATED BY THE FRENCH GOVERNMENT BETWEEN ' ' APERITIFS ' ' AND ' ' DIGESTIVES ' ' . IT IS NECESSARY TO POINT OUT THAT EVEN ARTICLE 406 OF THE CODE GENERAL DES IMPOTS DOES NOT CLASSIFY SPIRITS OBTAINED FROM THE DISTILLATION OF CEREALS AS ' ' APERITIFS ' ' BUT MERELY PLACES THESE TWO TYPES OF BEVERAGES SIDE BY SIDE IN THE GROUP OF PRODUCTS SUBJECT TO THE SAME MANUFACTURING TAX . IN FACT , THE DISTINCTION BETWEEN APERITIFS AND DIGESTIVES DOES NOT TAKE INTO ACCOUNT MANY CIRCUMSTANCES IN WHICH THE PRODUCTS IN QUESTION MAY BE CONSUMED BEFORE , DURING OR AFTER MEALS OR EVEN COMPLETELY UNRELATED TO SUCH MEALS ; IT SEEMS , MOREOVER , THAT , ACCORDING TO CONSUMER PREFERENCES THE SAME BEVERAGE MAY BE USED INDISCRIMINATELY AS AN ' ' APERITIF ' ' OR ' ' DIGESTIVE ' ' . THEREFORE IT IS IMPOSSIBLE TO RECOGNIZE , FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 95 OF THE TREATY , THE OBJECTIVE VALUE OF THE DISTINCTION UPON WHICH FRENCH TAX PRACTICE IS BASED .

37 THE SAME OBSERVATION APPLIES TO THE CRITERION FOR DISTINCTION BASED ON THE FLAVOUR OF THE VARIOUS SPIRITS FOR THE PURPOSE OF DETERMINING THE PROPERTIES OF THE PRODUCTS IN QUESTION WITH REGARD TO THE APPLICATION OF TAX LEGISLATION . THERE IS NO QUESTION OF DENYING THE REALITY OF AND THE SHADES OF DIFFERENCE IN THE FLAVOUR OF THE VARIOUS ALCOHOLIC PRODUCTS ; IT IS NECESSARY HOWEVER TO BEAR IN MIND THAT THIS CRITERION IS TOO VARIABLE IN TIME AND SPACE TO SUPPLY BY ITSELF A SUFFICIENTLY SOUND BASIS FOR DISTINCTION FOR THE DEFINITON OF CATEGORIES WHICH MAY BE RECOGNIZED THROUGHOUT THE COMMUNITY . THE SAME APPLIES TO CONSUMER HABITS WHICH ALSO DIFFER FROM REGION TO REGION AND EVEN ACCORDING TO SOCIAL ENVIRONMENT , SO THAT THEY CANNOT SUPPLY APPROPRIATE DIFFERENTIATING CRITERIA FOR THE PURPOSE OF ARTICLE 95 .

38 CLASSIFICATIONS BASED ON THE FLAVOUR OF THE PRODUCTS AND CONSUMER HABITS ARE ALL THE MORE DIFFICULT TO LAY DOWN SINCE THE PRODUCTS IN QUESTION , SUCH AS WHISKY AND GENEVAS , MAY BE CONSUMED IN VERY VARIED CIRCUMSTANCES , EITHER NEAT OR DILUTED OR IN THE FORM OF MIXTURES . OWING IN PARTICULAR TO THIS FLEXIBILITY OF USE , THOSE DRINKS MAY BE CONSIDERED AS SIMILAR TO A PARTICULARLY LARGE NUMBER OF OTHER ALCOHOLIC BEVERAGES OR AS IN AT LEAST PARTIAL COMPETITION WHICH THOSE BEVERAGES .

39 AFTER CONSIDERING ALL THESE FACTORS THE COURT DEEMS IT UNNECESSARY FOR THE PURPOSES OF SOLVING THIS DISPUTE TO GIVE A RULING ON THE QUESTION WHETHER OR NOT THE SPIRITUOUS BEVERAGES CONCERNED ARE WHOLLY OR PARTLY SIMILAR PRODUCTS WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 WHEN IT IS IMPOSSIBLE REASONABLY TO CONTEST THAT WITHOUT EXCEPTION THEY ARE IN AT LEAST PARTIAL COMPETITION WITH THE DOMESTIC PRODUCTS TO WHICH THE APPLICATION REFERS AND THAT IT IS IMPOSSIBLE TO DENY THE PROTECTIVE NATURE OF THE FRENCH TAX SYSTEM WITHIN THE SECOND PARAGRAPH OF ARTICLE 95 .

40 IN FACT , AS INDICATED ABOVE , SPIRITS OBTAINED FROM CEREALS , INCLUDING GENEVAS , HAVE , AS PRODUCTS OBTAINED FROM DISTILLATION , SUFFICIENT CHARACTERISTICS IN COMMON WITH OTHER SPIRITS TO CONSTITUTE AT LEAST IN CERTAIN CIRCUMSTANCES AN ALTERNATIVE CHOICE FOR CONSUMERS . BECAUSE OF THEIR CHARACTERISTICS , SPIRITS OBTAINED FROM CEREALS AND GENEVAS MAY BE CONSUMED IN VERY VARIED CIRCUMSTANCES AND AT THE SAME TIME COMPETE WITH BEVERAGES DESCRIBED AS ' ' APERITIFS ' ' AND ' ' DIGESTIVES ' ' ACCORDING TO FRENCH TAX PRACTICE WHILST , MOREOVER , SERVING PURPOSES WHICH DO NOT COME WITHIN EITHER OF THOSE TWO CATEGORIES .

41 AS THE COMPETITIVE AND SUBSTITUTION RELATIONSHIPS BETWEEN THE BEVERAGES IN QUESTION ARE SUCH , THE PROTECTIVE NATURE OF THE TAX SYSTEM CRITICIZED BY THE COMMISSION IS CLEAR . A CHARACTERISTIC OF THAT SYSTEM IS IN FACT THAT AN ESSENTIAL PART OF DOMESTIC PRODUCTION , IN OTHER WORDS SPIRITS OBTAINED FROM WINE AND FRUIT , COME WITHIN THE MOST FAVOURABLE TAX CATEGORY WHEREAS AT LEAST TWO TYPES OF PRODUCT , ALMOST ALL OF WHICH ARE IMPORTED FROM OTHER MEMBER STATES , ARE SUBJECT TO HIGHER TAXATION UNDER THE ' ' MANUFACTURING TAX ' ' . THE FACT THAT ANOTHER DOMESTIC PRODUCT , ANISEED SPIRITS , IS SIMILARY PLACED AT A DISADVANTAGE DOES NOT RULE OUT THE PROTECTIVE NATURE OF THE SYSTEM AS REGARDS THE TREATMENT FOR TAX PURPOSES OF SPIRITS OBTAINED FROM WINE AND FRUIT OR THE EXISTENCE OF AT LEAST PARTIAL COMPETITION BETWEEN THOSE SPIRITS AND THE IMPORTED PRODUCTS IN QUESTION . AS FOR THE FACT THAT THE MARKET SHARE OF WHISKY HAS INCREASED IN SPITE OF THE TAX DISADVANTAGE WHICH IT SUFFERS , THIS FACT DOES NOT PROVE THAT THERE IS NO PROTECTIVE EFFECT .

42 IT IS NECESSARY TO STATE IN CONCLUSION FROM THE FOREGOING THAT THE TAX SYSTEM APPLIED IN THE FRENCH REPUBLIC UNDER THE PROVISIONS OF THE CODE GENERAL DES IMPOTS IS INCOMPATIBLE WITH THE REQUIREMENTS LAID DOWN IN ARTICLE 95 OF THE TREATY AS REGARDS TAXATION ON THE ONE HAND ON GENEVAS AND OTHER ALCOHOLIC BEVERAGES OBTAINED FROM THE DISTILLATION OF CEREALS AND , ON THE OTHER , ON SPIRITS OBTAINED FROM WINE AND FRUIT .

COSTS

43 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

44 AS THE DEFENDANT HAS FAILED IN ITS SUBMISSIONS , IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS , THE COURT HEREBY :

1 . DECLARES THAT , BY THE APPLICATION OF DISCRIMINATORY TAXATION ON SPIRITS AS REGARDS , FIRST , GENEVA AND OTHER ALCOHOLIC BEVERAGES OBTAINED FROM THE DISTILLATION OF CEREALS AND , SECONDLY , SPIRITS OBTAINED FROM WINE AND FRUIT , UNDER ARTICLES 403 AND 406 OF THE CODE GENERAL DES IMPOTS , THE FRENCH REPUBLIC HAS FAILED , AS REGARDS PRODUCTS IMPORTED FROM OTHER MEMBER STATES , TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY ;

2 . ORDERS THE FRENCH REPUBLIC TO PAY THE COSTS .