Joined Cases C-367/93 to C-377/93. F. G. Roders BV and Others v Inspecteur der Invoerrechten en Accijnzen

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1 Joined Cases C-367/93 to C-377/93 F. G. Roders BV and Others v Inspecteur der Invoerrechten en Accijnzen (References for a preliminary ruling from the Tariefcommissie) (Excise duties on wine Discriminatory internal taxation Benelux system) Opinion of Advocate General Tesauro delivered on 19 January 1995 I Judgment of the Court (Sixth Chamber), 11 August 1995 I Summary of the Judgment 1. Tax provisions Internal taxation Treaty provisions Application to the Benelux countries Fruit or grape wines produced in those countries Domestic products within the meaning of Article 95 Tax system according preferential treatment to grape wines produced in Luxembourg Whether permissible Tax system according preferential treatment to fruit wines produced in one of the Benelux countries Prohibition Justification Legislation necessary for the functioning of the Benelux system Not necessary (EEC Treaty, Arts 95 and 233; Protocol of the Grand Duchy of Luxembourg, Art. 1(1), para. 2; Council Regulation No 541/70, Art. 2) I

2 SUMMARY JOINED CASES C-367/93 TO C-377/93 2. Tax provisions Internal taxation Prohibition of discrimination between imported products and similar domestic products Similar products Concept Interpretation Criteria Fruit wines, on the one hand, and red wines, sherry, madeira, vermouth and champagne, on the other hand (EEC Treaty, Art. 95, first para.) 3. Tax provisions Internal taxation Prohibition of internal taxation of such a nature as to afford indirect protection to other products Purpose Criteria of assessment Discouragement of the consumption of imported products (EEC Treaty, Art. 95, second para.) 4. Preliminary rulings Interpretation Effects in time of judgments providing an interpretation Retroactive effect Limitation by the Court Conditions Judgment concerning the interpretation of Article 95 of the Treaty and its application in the Benelux countries Conditions not satisfied Financial consequences of the judgment for the Member State concerned Not a decisive criterion (EEC Treaty, Arts 95 and 177) 5. Tax provisions Internal taxation Charges incompatible with Community law Repayment Detailed rules Application of national legislation Conditions Taking into account the possibility that the charges may have been passed on Whether permissible (EEC Treaty, Art. 95) 1. For the purposes of the application of Article 95 of the Treaty, an essential aspect of which is the definition of 'domestic products', Belgium, the Netherlands and Luxembourg are to be regarded as a single territory so far as excise duties on wines are concerned, in so far as the rates of duty levied in those countries on fermented fruit beverages and sparkling fermented beverages and the criteria governing their application have been standardized by provision for a common rate of duty and an additional duty applicable in Belgium and the Netherlands, and in so far as those countries have also set up a unified system for levying the excise duties and a mechanism for arranging settlements between the parties. Consequently, all fruit wines or grape wines produced in the Benelux countries are to be regarded as domestic products for the purposes of Article 95 of the Treaty. Although the preferential tax treatment, in relation to imported wines, accorded by the Benelux countries to Luxembourg grape wines was not therefore contrary to the Treaty, more particularly Article 95, having regard to the derogation allowed under the second paragraph of Article 1(1) of the Protocol on the Grand Duchy of Luxembourg annexed to the Treaty and I

3 RODERS v INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN maintained on the basis of Article 2 of Regulation No 541/70 on agriculture in the Grand Duchy of Luxembourg and other subsequent regulations, the Benelux countries were still not at liberty to favour wines, made from fruit other than grapes, produced in one of the three Benelux countries to the detriment of similar beverages coming from another Member State of the Community. as their origin, their method of manufacture and their organoleptic properties, in particular taste and alcohol content, and, secondly, to consider whether or not both categories of beverage are capable of meeting the same needs from the point of view of consumers. Such tax discrimination against imported products cannot be justified on the basis of Article 233 of the Treaty, since it cannot be regarded as necessary for the functioning of the Benelux system. A Member State may not rely on that provision in order to avoid its obligations under Article 95 of the Treaty where this is not indispensable for the good functioning of the Benelux system. 2. In order to determine whether products are similar for the purposes of the first paragraph of Article 95 of the Treaty, similarity being a concept which must be interpreted widely, it is necessary to consider whether the products at issue have similar characteristics and meet the same needs from the point of view of consumers, the test being not whether they are strictly identical but whether their use is similar and comparable. As regards, more particularly, the question whether fruit wines are similar to grape wines, it is necessary to consider objective characteristics of both categories of beverage, such It has already been held that, on the application of those criteria, red table wines and fruit wines must be regarded as similar products. As regards quality red wines produced in specified regions, liqueur wines such as sherry and madeira, and vermouth, on the one hand, and champagne, on the other hand, it is for the national court, having regard to the criteria identified above, to assess whether those products and, respectively, still fruit wines whose alcoholic strength does not exceed 15% vol. and sparkling fruit wines whose alcoholic strength does not exceed 15% vol. are similar, it having been established that, in the case of liqueur wines, vermouth and champagne, significant differences may be observed, both in the ways in which they are traditionally consumed and their respective organoleptic properties, and in the methods used to produce them. 3. The second paragraph of Article 95 of the Treaty is intended to prevent any form of I-2231

4 SUMMARY JOINED CASES C-367/93 TO C-377/93 indirect fiscal protectionism affecting imported products which, although not similar within the meaning of the first paragraph of Article 95, to domestic products are nevertheless in a competitive relationship with some of them, even if only partially, indirectly or potentially. 4. The interpretation which, in the exercise of the jurisdiction conferred upon it by Article 177 of the Treaty, the Court of Justice gives to a rule of Community law clarifies and defines where necessary the meaning and scope of that rule as it must be, or ought to have been, understood and applied from the time of its coming into force. It follows that the rule so interpreted may, and must, be applied by the courts even to legal relationships arising and established before the judgment ruling on the request for interpretation, provided that in other respects the conditions enabling an action relating to the application of that rule to be brought before the courts having jurisdiction are satisfied. The assessment of the compatibility of a fiscal charge with that provision must take account of the impact of that charge on the competitive relationships between the products concerned, the essential question being therefore whether or not the charge is of such a kind as to have the effect, on the market in question, of reducing potential consumption of imported products to the advantage of competing domestic products. In that connection, account must be taken of the difference between the selling prices of the products in question and the impact of that difference on the consumer's choice, as well as of changes in the consumption of those products. In view of those principles, limiting the effects of a judgment giving a preliminary ruling on a matter of interpretation appears to be quite exceptional and is conceivable only in certain specific circumstances, where there is a risk of serious economic repercussions owing in particular to the large number of legal relationships entered into in good faith on the basis of national rules previously considered to be validly in force, and where it appears that both individuals and national authorities have been led into adopting practices which do not comply with Community law by reason of objective, significant uncertainty regarding the implications of Community provisions, to which the conduct of other Member States or the Commission may even have contributed. Those conditions are not satisfied in the case of a judgment concerning the different tax treatment of domestic fruit wines and similar or competing imported products, and the application of Article 95 of the Treaty in the Benelux countries. Both the interpretation of that article and the question of its direct applicability have been dealt with in a long-standing, copious and varied body of case-law which I

5 RODERS v INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN has dispelled all doubts regarding the scope of that provision, this being particularly so where infringement proceedings have already been brought against the Member State concerned, precisely on the ground that its relevant legislation was incompatible with Article 95. Furthermore, the financial consequences which might ensue for a government owing to the unlawfulness of a tax have never in themselves justified limiting the effects of such a judgment. If it were otherwise, the most serious infringements would receive more lenient treatment, in so far as it is those infringements that are likely to have the most significant financial implications for Member States. Also, to limit the effects of a judgment solely on the basis of such considerations would considerably diminish the judicial protection of the rights which taxpayers have under Community fiscal legislation. 5. As regards repayment of national taxes levied contrary to Article 95 of the Treaty, although Community law does not preclude account from being taken of the fact that the burden of the charges unlawfully levied may have been passed on to other traders or to consumers, it is for the Member States to ensure repayment of charges unduly levied, in accordance with the provisions of their domestic law, on conditions which must not be less favourable than those relating to similar domestic actions and which must not in any case make it impossible in practice to exercise rights conferred by Community law. I