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CASE-LAW

C-158/80 - Rewe-Handelsgesellschaft Nord mbH and Rewe-Markt Steffen v Hauptzollamt Kiel
61980C0158

OPINION OF MR ADVOCATE GENERAL CAPOTORTI

DELIVERED ON 18 MARCH 1981 ( 1 )

Mr President,

Members of the Court,

1. 

By an order of 5 June 1980 the Finanzgericht [Finance Court] Hamburg referred to the Court of Justice numerous preliminary questions, eight to be precise, which stem from an action involving somewhat unusual facts. In order to summarize them it is necessary to explain that certain shipping companies in the Federal Republic of Germany, above all in Flensburg and Hamburg, organize very short cruises (generally lasting a few hours) leaving from and returning to German ports on the Baltic Sea or the North Sea. They have acquired the nickname of “butter-buying cruises” because their essential, or indeed only, attraction is to afford passengers the opportunity of acquiring certain goods free of customs duties, indirect taxes or any other charges.

The ships in fact have on board various kinds of foodstuffs (such as butter, cheese and meat) and other products (spirits, tobacco, coffee, tea, perfumes and so on) coming from the Community or from non-member countries. In order to fulfil the German requirements for exemption from customs and excise duties it is sufficient for such ships to pass beyond the maritime customs frontier and then return to the port of departure without making a call abroad; but sometimes, on rare occasions, they proceed to the high seas outside the territorial waters of the Federal Republic and make a very short call at a Danish port since passengers are thus afforded increased exemptions from customs and excise duties. It should be recalled in this connexion that the order of 3 December 1974, entitled the “Reisegepäck-Verordnung”, makes provision for exemption in respect of “major transit” when a ship comes from the high seas or from a foreign port or has at any rate remained outside the customs territory for at least eight hours, whilst a reduced exemption is granted in respect of “minor transit” where short trips are made in the coastal waters beyond the customs frontier. Apart from this the particularly attractive prices of the agricultural products purchased on board ship are also influenced by the fact that when such products leave the customs territory of the Community they qualify for subsidies from the European Agricultural Guidance and Guarantee Fund through the granting of export refunds and monetary compensatory amounts.

These operations are on a large scale. According to the information provided by the court which submitted the reference, in the year 1979 in the area covered by the defendant customs office alone butter-buying cruises were made by 32 ships and some 1850000 passengers. That explains the origin of the main action, which was brought by the two Rewe undertakings which run businesses on the Baltic coast of Schleswig-Holstein and market, the one as a wholesaler, the other as a retailer, the same kind of products as those sold in the course of the above-mentioned cruises. Since the undertakings in question considered that they suffered unfair competition from the shipping companies, which attracted from ordinary businesses a considerable proportion of the customers resident in the Baltic littoral, they instituted proceedings before the Finanzgericht Hamburg against the Principal Customs Office, Kiel, in order to put a stop to the dutyfree importations effected in the manner described above. According to the plaintiffs the customs and tax exemptions for which the butter-buying cruises qualify are in breach of Community law; accordingly, they seek an injunction restraining the customs office from applying such exemptions or, in the alternative, a declaration that it may not grant them.

In the course of those proceedings the German court decided to request the Court of Justice to deliver a ruling under Article 177 of the EEC Treaty on a number of different questions. First of all, it requests an interpretation of the Community provisions on exemptions from customs duties, turnover tax and other indirect taxes in order to clarify the conditions to which the exemptions are subject (Question 1 of Group I and Group II). Secondly, it wishes to establish whether these provisions leave any margin of discretion to the Member States (Question 2 of Groups I and II). Thirdly, it raises the problem of the legal position (and in particular the possibility of seeking redress through the courts) of persons who are adversely affected by national provisions which infringe a regulation or directive (Question 3 of Groups I and II). Finally, the German court asks whether Regulation No 3023/77 is invalid (Question 4 of Group I) and, if the reply is in the affirmative, is wishes to know what rights are enjoyed by individuals adversely affected by national provisions based on the invalid regulation (Question 5 of Group I).

I propose to broach the questions in the order indicated above which appears to make them easier to deal with even though the court submitting the reference preferred to draw a distinction between all the questions concerning the exemption from customs duty (Group I) and those which, on the other hand, concern the exemption from turnover tax and excise duty (Group II). I shall discuss the content of the relevant Community provisions as the problems concerning them arise.

2. 

The first question in Group I is worded as follows:

“Is Regulation (EEC) No 1544/69 of the Council of 23 July 1969, as last amended by Council Regulation (EEC) No 3061/78 of 19 December 1978, to be interpreted as meaning that the exemption from customs duties mentioned therein applies only to goods which come from the customs territory of a non-member country and additionally as the case may be to goods which are in free circulation in that country for the purposes of customs law, or is it sufficient for the goods to have originated in Member States and to have been imported by sea across the maritime customs border or the frontier of the national territory of the respective Member State?”

It may be seen that the alternatives put forward by the court submitting the reference are based on the origin of the goods which qualify for the exemption from customs duty. This approach must, however, be rejected as there is no basis for it in Regulation No 1544/69. That regulation concerns the tariff applicable to goods contained in travellers' personal luggage and is designed to meet the need for “Community arrangements for relief from duty covering passenger traffic between third countries and the Community” (penultimate recital in the preamble); however the regulation is not concerned at all with the origin of the goods. The relevant factor for the application of these provisions is that the traveller should enter the Community from a non-member country; furthermore, the exempt goods must form part of his personal luggage, they must have no commercial character and their total value must remain within certain limits (see Article 1 (1) of the regulation; a quantitative limit is nevertheless fixed for certain products). Moreover, the literal interpretation accords with that arrived at through taking account of the objective of the provisions in question: the establishment of the customs exemption is not in fact intended to render easier the movement of goods between non-member countries and the Community but only to facilitate the journeys of travellers by simplifying the work of the customs authorities. Accordingly, the fact that the relief from customs duty disregards the origin of the goods and the place where they were acquired is perfectly in accordance with the objective of Regulation No 1544/69.

In the amendment to Article 1 (1) of that regulation by Council Regulation No 3061/78 care was taken to specify that relief is available only to “travellers coming from third countries”; that clarification was provided in order “to prevent possible false interpretation”, as is stated in the last recital in the preamble to Regulation No 3061/78. There is accordingly no doubt that the exemption provided for in Regulations Nos 1544/69 and 3061/78 does not apply to travellers coming from Member States of the Community. That is confirmed in any case by the Council's declaration in the second recital in the preamble to Regulation No 3023/77 of 20 December 1977 that Regulation No 1544/69 “does not apply to goods imported following a voyage from a Member State on a ship which has not called at a port within the customs territory of a third country”.

3. 

The first question of the second group closely parallels the question which I have just considered, but is concerned with the different matter of exemption — from turnover tax and excise duty. It asks :

“Is Council Directive No 69/169/EEC of 28 May 1969, as last amended by Council Directive No 78/1032/EEC of 19 December 1978, to be interpreted as meaning that the exemption from turnover tax and excise duty therein provided for applies only to goods in travellers' personal luggage which come from the customs territory of a non-member country (Article 1) or, if they originate in a Member State, from the customs territory of the Community (Article 2) and additionally, as the case may be, to goods which are in free circulation for the purposes of customs law in a non-member country or Member State, or is it sufficient for the goods to have been imported by sea across the maritime customs border or the frontier of the national territory of the respective Member State?”

The objective of Directive No 69/169 is, as its title indicates, to harmonize the provisions laid down by law, regulation or administrative action relating to exemptions from turnover tax and excise duty on imports in international travel. Unlike the provisions of Regulation No 1544/69, the expression “international travel” covers both travellers coming from non-member countries and those coming from other Member States; it should in fact be stated that, amongst the objectives of the directive, emphasis is placed above all on the need for greater liberalization of the system of taxes on imports in travel between Member States (second and third recitals in the preamble). However, subject to that exception, the general approach in the directive is the same as that which is to be found in the regulation adopted two months later (Regulation No 1544/69), that is to say, the origin of the goods is not taken into consideration at all and the criteria for granting the exemption are the origin of the travellers, the fact that the goods are contained in their personal luggage, the non-commercial character of the importation and the limited value (or quantity) of the imported goods. Accordingly, since the origin of the goods or the place from which they come are not to be taken into consideration, the exemption provided by that directive is not available to passengers on cruises which depart from, and return to, ports of the same Member State and do not touch the territory of other Member States or non-member countries.

It is scarcely necessary to add that the sort of travel involved in the cruises “without port of call” certainly cannot be considered to fall within the term “travel between Member States” contained in Article 2 of Directive No 69/169. The wording is too precise to be stretched so far. Besides, the result would be contrary to one of the basic premises on which the exemption in question is founded, namely that as a general rule goods purchased in one Member State have already borne tax and the exemption from such tax on importation into another State “avoids double taxation without leading to an absence of taxation” (fourth recital in the preamble to the directive).

Further support for that point of view is provided by Article 2 (4), which was added to the original text of the article by Council Directive No 78/1032 of 19 December 1978. It provides that, where the travel from one Member State to another involves transit through the territory of a non-member country or begins in a part of the territory of another Member State in which the taxes referred to in the directive are not chargeable on goods consumed within that territory, “the traveller must be able to establish that the goods transported in his luggage have been acquired subject to the general conditions governing taxation on the domestic market of a Member State and do not qualify for any refunding of turnover tax and/or duty”, failing which Article 1 applies. Accordingly, if the traveller is unable to furnish the above-mentioned proof he may qualify, after 1 January 1979, only for the more limited exemption laid down for travel between non-member countries and the Community. In any case, even to qualify for the reduced exemption, the traveller must have come from another Member State, which condition clearly is not satisfied in the case of cruises consisting of a short sea voyage beyond the customs frontier without a call at a foreign port.

4. 

In the second question of the first group the Finanzgericht Hamburg asks :

“Does Regulation (EEC) No 1544/69 of the Council, as last amended by Council Regulation (EEC) No 3061/78, where appropriate read in conjunction with Article 28 of the EEC Treaty — save in the case of the goods covered by Council Regulation (EEC) No 3023/77 of 20 December 1977 — contain exhaustive rules for the exemption from customs duties of goods in travellers' personal luggage or may Member States independently grant exemption from customs duties going beyond the scope of Regulation (EEC) No 1544/69 save in the case of the goods covered by Regulation (EEC) No 3023/77?”

As I had occasion to remark in my opinion of 27 November 1980 in Case 50/80, Horvath, certain customs matters continue to be governed in the individual Member States by national provisions which have not been harmonized with those in force in the other Member States. The reason for this is that the field in question does not require to be governed in its entirety by Community provisions but falls in part within the scope of the national legal systems, which have yet to be completely harmonized. Nevertheless, these general considerations are not sufficient to supply an answer to the question posed by the German court; in this case indeed the subject-matter is clearly defined, namely exemption from customs duties, and is governed by provisions directly enacted by the Community legislature through Regulation No 1544/69.

The manner in which the question is phrased would appear to suggest that the German court took the view that, if the abovementioned regulation does not lay down exhaustive rules governing the exemption from customs duties of goods contained in the personal luggage of travellers, the Member States may take action in the area not covered by the Community provisions. In my opinion, that view must be corrected. It must be assumed in the first place that customs duties are governed by the Common Customs Tariff (Articles 3 (b), 9 (1) and 23 (3) of the EEC Treaty), which is applied, as the Court is aware, to all imports to the Community, and that any grant of exemption from customs duties constitutes a restriction on the effective scope of the tariff. If those assumptions are accepted it is clear that measures by individual Member States which are intended to extend the scope of the exemptions from customs duties arising from Community provisions are not permissible.

In fact, after the end of the transitional period, apart from the possibility of enacting exceptional protective measures for one or other Member State (where special circumstances justify them), the sole means of altering the application of the duties of the Common Customs Tariff is the procedure laid down by Article 28 of the EEC Treaty, the same provision on which Regulation No 1544/69 in based. According to that article, “any autonomous alteration or suspension of duties in the Common Customs Tariff shall be decided unanimously by the Council” (or by a qualified majority where the alterations or suspensions do not exceed 20 % of the rate in the case of any one duty and do not remain in force for more than six months). Concessions such as those granted by Regulation No 1544/69 to travellers coming from non-member countries constitute exemptions from the duties charged under the Common Customs Tariff; furthermore, it should be borne in mind that according to the Court the powers conferred upon the institutions by Article 28 (and by other provisions on the customs union) must be construed broadly in order to allow those institutions to regulate external trade coherently (judgment of 12 July 1973 in Case 8/73 Massey-Ferguson [1973] ECR 897, paragraph 4 of the decision). Finally, I would observe that any alteration or suspension of the duties of the Common Customs Tariff adopted under Article 28 takes effect directly in all Member States, thereby upholding the principle that the Common Customs Tariff must be applied uniformly throughout the Community. It would not be consistent with that principle to hold that individual Member States are empowered to introduce or maintain exemptions from the customs duties on their own initiative.

5. 

In the second question of the second group the Finanzgericht Hamburg asks: “Does Council Directive No 69/169/EEC, as last amended, contain definitive rules for the exemption from turnover tax and excise duty of goods in travellers' personal luggage or may Member States independently grant goods in travellers' personal luggage exemption from turnover tax and excise duty going beyond the scope of the directive?”

Although this problem is clearly similar to the one I have just examined, the point made in the order for reference, namely that different criteria should apply, appears to me justified. In fact, whilst exemptions from customs duties are directly governed by Community provisions, the powers of the Community in the field of internal taxation are confined to issuing directives intended to harmonize national laws. In the field of taxation, therefore, the Member States may in principle enact autonomous measures, provided that their content is not incompatible with the Treaty and with Community directives.

In considering the scope of Directive No 69/169 I have already had occasion to explain that that directive does not deal with the case of persons who embark at a port of a Member State and return there after a short voyage beyond the maritime customs frontier. Consequently, the question must be raised whether there is a conflict between the objective of that directive, or its content, and national provisions which extend the tax exemptions to passengers on “cruises” of the type described.

The two principal objectives of the directive are, as its preamble shows, the greater liberalization of the system of taxes on imports in travel between Member States in such a way as to proceed towards the creation of conditions similar to those of a domestic market (third recital) and to reduce taxes on imports in respect of travel between non-member countries and the Community (last recital). It seems to me that neither of these objectives is jeopardized by exemptions granted unilaterally by one Member State in favour of persons who, in the course of a cruise without any port of call, do not travel either between Member States or between the Community and non-member countries. It is scarcely necessary to add, parenthetically, that Member States continue to be under a duty to apply the provisions of the directive in all cases where such cruises call at ports in other Member States or in non-member countries.

With regard to the arguments which may be founded on the content of the directive, it must be borne in mind that that directive makes express provision for a number of cases in which the Member States are empowered to enact provisions which supplement, or derogate from, the general rules of the directive (I refer inter alia to Articles 2 (2), 4 (1), 5 (2) and (3) and Article 6 (2) and (3)). According to the Commission, this shows by implication that no independent power is left to the Member States to enact legislation in the field of tax exemptions. It appears to me, however, that in the cases mentioned there is conferred upon the Member States a discretion to alter the application of the general provisions of the directive in relation to certain situations or particular categories of travellers, provided always that they fall within the class of situations and persons to whom the directive applies. But the question under consideration concerns the power of Member States to introduce tax exemptions in regard to situations and persons who do not come within the scope of the directive at all.

Amongst the provisions of the directive which I referred to particular attention should be paid to Article 6 (2), as amended by Directive No 78/1032 of 18 December 1978. That paragraph enjoins the Member States to take the necessary steps to permit, in specified cases, the remission of turnover tax on deliveries of goods carried in the personal luggage of travellers; however, it begins by creating an exception with regard to the provisions relating to sales made at airport shops under customs control and on board aircraft (that is to say, such provisions must remain unaffected). This raises the question whether it is correct to infer from that reservation, which has a wide scope, that the Council intended to consider exhaustive the provisions on tax exemptions for travellers contained in the directive, so that, in the absence of other express reservations, the Member States may not be deemed to be empowered to grant such exemptions outside the terms of the directive. I consider that the reply must be in the negative. Even the reservation in question is clearly connected with the matter specifically governed by Article 6; the case in question, on the other hand, as I must repeat, concerns a field which is not dealt with in the directive and in which legislative action by a Member State does not imply a breach of the Community provisions.

These considerations lead me to take the view that, since tax exemptions in favour of passengers on cruises without a port of call are not contrary to Community law, they fall within the discretion of the national legislature.

6. 

In the third question of the first group the German court asks :

“Does a breach of a Community regulation give directly applicable rights to a person whose rights have been adversely affected by provisions laid down by the law or administrative action of a Member State or the implementation thereof which are inconsistent with the provisions of that regulation so that he may bring an action before a national court for the application of measures contravening Community law to be discontinued or for the provisions of Community law to be complied with?”

This question, as it is worded, appears to be tautologous. If indeed it is accepted that persons enjoy rights under a Community regulation and such rights are adversely affected by the law or administrative action of a Member State which is contrary to the regulation, there is no doubt that such persons are entitled to protect their rights by taking action to enforce the regulation in the national courts (the regulation must take precedence over conflicting national provisions). Nevertheless, it is necessary to have regard to the facts of the case brought before the Finanzgericht Hamburg and to clarify the meaning of the question in the light of those facts. In substance, then, the point to be settled is whether, when a Member State has granted exemptions from customs duties which according to Community law it was not entitled to grant and has thereby infringed the regulation on the Common Customs Tariff, traders who suffer loss through the effects of such exemptions may apply to the national courts for an injunction restraining the customs authorities from applying the internal provisions concerning exemptions or, in the alternative, requiring them to comply with the provisions of the Common Customs Tariff.

In its observations the Commission referred to the judgment of 22 January 1976 in Case 60/75 Russo ν ΑΙΜΑ ([1976] ECR 45) in support of the proposition that a Community provision may be relied upon by individuals only when the purpose of that provision is to protect their interests. However, the judgment in question concerned a case in which a producer of cereals instituted proceedings before the national courts on the ground that there had been a breach of Community law by the Azienda di Stato per gli Interventi sul Mercato Agricolo [the Italian intervention agency] in order to justify a claim for damages aginst that body. In its decision the Court held that the Community provisions conferred a right upon individual producers and ruled that, if damage is caused by an infringement of Community law on the part of the State, “it will be for the State, as regards the injured party, to take the consequences upon itself in the context of the provisions of national law relating to the liability of the State”.

In the present case the plaintiffs are not claiming damages for the loss incurred by them as a result of the exemptions granted to importers of goods sold during the butter-buying cruises, but are merely asking that the normal provisions of the Common Customs Tariff should be applied to such importations; that is to say, they are merely requesting the proper application of Community law. The question which we are now considering concerns, as I have said, the right of traders who have suffered loss through the practical effects of the exemptions to request the courts to order the customs authorities to discontinue such exemptions (or to comply with the Common Customs Tariff).

In my view, in order to resolve that problem it is necessary to proceed on the basis of two considerations of a general nature. The first concerns the relationship between a legal rule, a personal right and an interest in the application of the rule. Of course every legal rule provides for a particular type of situation and a legal relationship arises between the persons who in fact come to be in that situation; one of those persons, within the framework of binding legal relations, acquires a personal right. Naturally, that applies also to provisions of Community law created by regulations; thus, as regards the Common Customs Tariff, the right to invoke it arises out of a specific importation or exportation and the person entitled is the person who effects that operation. There is accordingly no doubt that every importer is entitled to the proper application of the tariff by the customs authority, as regards himself and that that right arises out of his act of importation. It is another matter to speak of the rights of importers as a class to demand compliance with the tariff; if the matter is put in these terms it remains at a general and hypothetical level and does not extend to identification of a specific right, that is to say to the creation of a specific legal relationship. It is yet another matter to speak of an interest in the proper application of a provision, for example, the interest of traders in seeing that customs duties are properly applied in relation to imported goods which compete with those produced or distributed by them. In fact every legal provision does of course by its nature reflect collective interests, even beyond the classes of persons to whom it applies; thus persons who have an interest in the enforcement of a particular provision are much more numerous than those who have a right, or who may be able to claim a right, under that provision.

The second consideration concerns the procedural aspect of the question. In order to be entitled to institute proceedings before the courts (for example for an injunction requiring another person to fulfil certain obligations) the plaintiff must be personally entitled to the right which the proceedings are specifically intended to uphold. In fact, court proceedings are not employed to provide general and hypothetical confirmation of the content of a rule but to apply it within the framework of a particular relationship. Accordingly, a person who merely has an interest in the enforcement of a rule, or more precisely, a person who does not stand in a specific legal relationship based on the rule, is not entitled to rely upon that rule before the courts.

These general considerations must now be applied to the problem raised by the Finanzgericht Hamburg. I observe first of all that the unlawful grant of exemptions from customs duties by a Member State involves, or at any rate appears to involve, a twofold breach of Community law: on the one hand, there is an infringement of the rule which precludes the State from legislating in a field reserved to the Community legislature; on the other hand, there is a failure to apply the Common Customs Tariff. The first infringement fails to observe the division of powers between the Community and the Member States; the right to have that division observed belongs to the Community, and as far as procedure is concerned, to the Commission. The second infringement is merely a consequence of the first; in fact there has been no specific case of the improper application of the tariff to an importer (for example, the application of a customs duty at variance with the Common Customs Tariff), but the scope of the Tariff has been unlawfully restricted by a legislative measure in breach of the duty of ¡the State to apply the customs duties fixed by the Community to imported products. From this point of view also, the right to demand that the Common Customs Tariff be applied in full belongs, in my opinion, to the Community and not to one or other private individual who happens to be a member of a class having an interest in the enforcement of the tariff.

In conclusion, the proposition may be advanced that it is sufficient not to confuse, on the one hand, the personal right which arises in the context of a specific relationship on the conditions laid down in the provision in question and, on the other hand, the interest of third parties that the provision should be observed. Only the holder of the right, as opposed to a person who has an interest of the latter class, is entitled to bring legal proceedings in order to ensure that the provision is applied in relation to his particular situation. Any other view would entail allowing a kind of azione popolare [civil action serving as a test case on a matter affecting public interests] on the basis of directly applicable Community provisions; but that would be contrary to the legal traditions common to the Member States and would, moreover, threaten to give rise to serious practical difficulties in the administration of justice (one has only to think of the number of persons who might have some kind of interest in the proper application of certain Community provisions!).

The conclusion at which I have arrived does not, however, rule out the possibility that persons having an interest in the enforcement of a regulation may be able to claim rights under the national legal system applicable to them where the action of the administrative authorities at variance with Community law is subject to an appraisal the basis of which includes provisions or principles of national law, provided that under such provisions or principles the persons in question are considered to have rights which may be enforced in the courts. The most obvious example is the right to damages for the loss resulting from an unlawful act of the administrative authorities: the matter dealt with in the above-mentioned judgment in the Russo ν ΑΙΜΑ case. However, there is nothing to preclude the view that, where there are provisions of national legislation at variance with Community law or with personal rights guaranteed by the constitution (where, for example, a national constitution extends protection of the right to equal treatment to persons engaged in economic activity), a private individual may rely upon such rights in order to have the provisions discontinued and thereby ensure, indirectly, that Community law is complied with.

7. 

The third question of the second group closely parallels the question which has just been considered. It asks :

“Does Council Directive No 69/169/EEC, as last amended, give directly applicable rights to a person whose rights have been adversely affected by provisions laid down by the law or administrative action of a Member State or the implementation there of which are inconsistent with the provisions of that directive, so that he may bring an action before a national court for the application of national measures contravening Community law to be discontinued?”

It seems to me superfluous to repeat the general considerations which prompted me to draw a distinction between the rights of persons to whom a provision is intended to apply and the mere interest of third parties in having that provision enforced. I shall therefore simply observe that if it is conceded in principle that a directive may directly create rights for the benefit of individuals the situation is the same as that regarding the effects of a regulation, which by its nature is directly applicable. The solution accordingly cannot differ.

Nevertheless it appears to me appropriate to add two specific remarks. First, it must be borne in mind that the provisions of a directive are not usually of such a nature as to create rights for the benefit of individuals; such an effect may be recognized only as an exception and with regard to certain provisions of directives which display specific characteristics. With regard to Directive No 69/169 an examination into that point was neither carried out nor requested; it is furthermore clear that the reply given to the preceding question removes the need for such an examination. Secondly, the opinion which I have expressed with regard to the second question of the second group means that Member States are not in breach of Directive No 69/169 in granting independently tax exemptions in excess of those provided for in that directive. Consequently, the assumption contained in the question under discussion (that is to say, that a Member State has laid down provisions by law or administrative action which are inconsistent with the provisions of the said directive) has already been shown to be unfounded.

8. 

In the fourth question of the first group the Finanzgericht Hamburg asks :

“Is Council Regulation (EEC) No 3023/77 invalid because it is in breach of a superior rule of Community law (for example, the principle of equality, the prohibition of discrimination, freedom of competition, the principle of proportionality)?”

It should first of all be made clear that Regulation No 3023/77, which was adopted by the Council on 20 December 1977, concerned “certain measures to put an end to abuses resulting from the sale of agricultural products on board ship”. As is stated in the preamble, the scope of the relief from duty introduced by Regulation No 1544/69 for passengers from non-member countries was subsequently extended by Regulation No 1818/75 of 10 July 1975 to agricultural levies and other import charges provided for under the Common Agricultural Policy (or under special arrangements applicable to certain goods resulting from the processing of agricultural products). No exemption was applicable to goods imported following a voyage from a Member State on a ship which did not call at a port within the customs territory of a non-member country: that is stated in the second recital in the preamble to Regulation No 3023/77, which I had occasion to mention when I was dealing with the first question. In practice, however, exempt sales were in fact effected on ships which did not call at a port of the kind indicated above and such sales included Community agricultural products coming from non-member countries: the fourth recital in the preamble establishes the existence of this state of affairs.

In view of these abuses the Council considered that “the legal situation in this connexion should be clarified” and to that end considered it appropriate that “Member States should be authorized to grant exemptions for the products listed in Annex II to the Treaty sold or distributed on board ships under the above conditions for very limited quantities beyond which these products may no longer be introduced into the Community unless the proper import duties are paid” (last recital in the preamble to Regulation No 3023/77). In other words the Council contented itself with restricting the abuse and legalizing it. Accordingly, pursuant to Article 1 of that regulation, Member States are empowered to authorize exemption from import duties (including both customs duties and agricultural levies) for small quantities of products such as butter, cheese, meat, wine and other items listed in Annex II to the Treaty, sold or distributed on board ships in the course of cruises without a port of call.

It appears to me that there are various grounds for upholding the argument that Regulation No 3023/77 is invalid. First, the Council could not have been unaware that the exemptions granted to customers on the so-called “butter-buying cruises” conferred on the organizers of such cruises a considerable competitive advantage over businesses selling the same products on land in the area near the ports from which the ships sailed. The ships used for the “butter-buying cruises” are in fact simply floating markets in which certain goods may be bought much more cheaply than in normal commercial operations. In this connexion I would point out that, in addition to the advantage conferred by the exemption from customs duties, agricultural levies and other import charges (Article 1 (1) and Article 2 of the regulation), where the goods in question were of Community origin they qualified until 31 December 1980 for Community export subsidies in the form of refunds and monetary compensatory amounts (first indent of Article 1 (1)). In the course of these proceedings we have heard that the grant of such subsidies for the “butter-buying cruises” was abolished as from 1 January 1981. This shows that the Community executive itself considered it excessive to maintain in force in their entirety the exceptionally favourable conditions which Regulation No 3023/77 created for the organizers of the floating markets. On the other hand, since the situation to which the national court refers concerns a time when those conditions had not yet been amended, our consideration of the entire range of advantages obtained under Regulation No 3023/77 by the shipowners operating the “butter-buying cruises” must have regard to all the aspects which have been described.

That leads me to the view that the Council acted in breach of the general principle that there should be no discrimination between undertakings when, by its measures of 20 December 1977, it granted to a class of them a privileged position for which there was no objective justification. The fact that the direct beneficiaries of Regulation No 3023/77 were the people who took advantage of the “butter-buying cruises” (the passengers) does not, in my view, rule out consideration of the actual effects which operated in favour of the organizers; in fact, the interests of the latter were necessarily affected by measures concerning (as is stated) the sale of agricultural products on board ship. It is scarcely necessary to add that, although the regulation was intended “to put an end to abuses” — and restricted the quantity of products which might be bought free of duty — the advantageous arrangements were not abolished but on the contrary were recognized by the Community; such recognition was in breach of the principle of non-discrimination.

A second ground of invalidity may be discerned, in my view, by comparing the apparent objectives of Regulation No 3023/77 with its real purpose. According to the last recital in the preamble (quoted above) and the title of the regulation, its objective was to clarify the legal situation and put an end to abuses. I must nevertheless observe that the solution arrived at in order to eliminate the abuse is, to say the least, peculiar: to confer upon it, albeit to a limited extent, a veneer of lawfulness. Furthermore, Regulations Nos 1544/69 and 1818/75, the improper application of which at national level gave rise to the abuses complained of, were intended to facilitate matters for travellers coming from non-member countries and at the same time to simplify customs formalities. These objectives are clearly foreign to Regulation No 3023/77.

The endeavour to ascertain a Community interest justifying the exemptions granted for the butter-buying cruises prompts a query as to what provision of Community law Regulation No 3023/77 is based on. At the beginning of the preamble reference is made to the EEC Treaty, although no particular article is specified. It might be thought that, like Regulation No 1544/69, the regulation now under consideration was adopted on the basis of Article 28 which, as I have noted above, confers upon the Council the task of deciding upon “any autonomous alteration or suspension of duties in the Common Customs Tariff”. There is, however, reason to doubt that, because the regulation does not derogate from the Common Customs Tariff in a general and uniform manner but merely grants Member States a power to derogate which, since it may or may not be exercised, is ultimately at variance with the requirement that the Tariff should be uniform. Thus by this approach also it is difficult to identify a basis for the measure in question in objectives related to the interests of the Community.

In fact, the information available points to the conclusion that the abuses mentioned in the fourth recital in the preamble to the regulation occurred in one Member State only: the Federal Republic of Germany. If that is borne in mind, it becomes apparent that the power to grant exemptions which the regulation formally conferred on all Member States fulfilled the sole purpose of permitting the continuation of a trade which is of specific interest to the Federal Republic (probably because it constitutes a source of employment amonst other reasons). Seen from this point of view the regulation must be considered a kind of disguised protective measure. That this is really so is, moreover, shown with greater clarity by the draft submitted by the Commission (and subsequently modified by the Council) in which the period for the exercise of the power granted to Member States was limited to six months.

From these circumstances as a whole I deduce that, in adopting Regulation No 3023/77, the Council exercised its legislative powers for purposes which were other than those apparent and which in any case cannot be traced to any objective of interest to the Community. The measure must accordingly be considered to be vitiated by misuse of powers.

In my view a third and final ground of invalidity consists in the absence of an adequate statement of the reasons on which the regulation was based. I have already indicated the contradictory, and in any case insufficient, nature of the last recital, which, ultimately, is all that the statement of reasons amounts to. I must further emphasize that, since the measure fell outside the objectives pursued by Regulation No 1544/69 and fractured the uniformity of the Common Customs Tariff, it required a particularly thorough and convincing statement of the reasons on which it was based. There is, however, no trace of that. It therefore appears to me that the obligation laid down by Article 190 was clearly not discharged.

9. 

The fifth question of the first group is dependent on an affirmative reply to the previous question. Thus it presupposes that the Court will declare Regulation No 3023/77 invalid; in that case the court trying the main action wishes to have a reply to the following question:

“If the answer to Question 4 is in the affirmative does a person whose rights are adversely, affected by reason of the law or administrative provision of a Member State, or the implementation thereof, based on Council Regulation (EEC) No 3023/77, acquire directly applicable rights so that he may bring an action before a national court for the application of measures contravening Community law to be discontinued?”

Despite the apparent similarity to the third question of the first group the problem with which we are here confronted is different. The problem is not in fact to clarify the legal position of individuals where a regulation has been infringed by conflicting measures adopted by a Member State; it concerns instead the position of persons who have been adversely affected by an invalid regulation and raises the question whether such persons may bring an action before the courts for a declaration that the national measures adopted on the basis of that regulation (or, to be more precise, in exercise of a discretion conferred by the regulation) are inapplicable.

In my view, the decisive factor resides not only in the invalidity of Regulation No 3023/77 but in the fact that such invalidity is a consequence of the breach of the principle of non-discrimination between competing undertakings. Since that principle is specifically concerned with the protection of private individuals, persons who have suffered discrimination at the hands of the Community legislature should, in my opinion, be considered entitled to rely before the courts on their right to equal treatment with competitors in order to have such equality restored through the setting aside of the national measures improperly authorized by the Community institutions. That implies, of course, that the right of private individuals not to suffer discrimination should be understood in a wide sense, as a reflexion of the duty of the Community authorities which is constantly incumbent on them and which requires them to give consideration to the practical economic effects of all of their measures. However, it is unnecessary for me to dwell upon this point since I have already discussed it in my analysis of the factors vitiating Regulation No 3023/77.

10. 

On the basis of the arguments which are set out above, I therefore propose that the Court should reply to the questions submitted by the Finanzgericht Hamburg by order of 5 June 1980 with the following ruling:

1.

The exemption from customs duties provided for by Regulation No 1544/69 of the Council of 23 July 1969 (as last amended by Council Regulation No 3061/78 of 19 December 1978) applies to goods contained in the personal luggage of travellers coming from non-member countries irrespective of the origin of the goods or the place from which they come.

2.

The tax exemptions provided for by Council Directive No 69/169/EEC of 28 May 1969 (as last amended by Directive No 78/1032/EEC of 19 December 1978) apply to goods in the personal luggage of travellers coming from a non-member country or from another Member State of the Community irrespective of the origin of the goods or the place from which they come.

3.

Only the Community, and on its behalf the Council, may decide upon derogations, suspensions or alterations of the import duties laid down in the Common Customs Tariff. Consequently, there can be no question of any independent power of the Member States to grant exemptions in this field.

4.

Directive No 69/169/EEC does not prevent Member States from independently granting advantageous tax treatment in respect of goods contained in the personal luggage of travellers who return to the Member State of their departure after making a cruise beyond its maritime customs frontier without calling at the ports of other States.

5.

A person who has a right under a provision in a Community regulation may bring legal proceedings in order to ensure that that provision is applied in relation to him. Third parties who merely have an interest as members of a class in seeing the provisions of a regulations observed are not so entitled. The same criteria apply with regard to the directly applicable provisions of a Community directive.

6.

Council Regulation No 3023/77 of 20 December 1977 is invalid on the grounds of breach of the principles of non-discrimination, misuse of powers and failure to provide a sufficient statement of the reasons on which it is based.

7.

Undertakings which have suffered discrimination in relation to their competitors through the effects of a Community measure which is subsequently declared invalid as being contrary to the principle of nondiscrimination are entitled to rely before the courts on tneir right to equal treatment in order to have the national provisions adopted on the basis of that measure discontinued.


( 1 ) Translated from the Italian.

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