Court of Justice of the European Communities (including Court of First Instance Decisions)

1 . TAX PROVISIONS - INTERNAL TAXATION - DISCRIMINATORY TAXATION COMING UNDER A SYSTEM OF AIDS - CUMULATIVE APPLICATION OF ARTICLES 92 , 93 AND 95 OF THE TREATY
( EEC TREATY , ARTS . 92 , 93 AND 95 )
2 . TAX PROVISIONS - INTERNAL TAXATION - DISCRIMINATORY TAXATION COMING UNDER A SYSTEM OF AIDS - APPLICATION FOR A DECLARATION OF FAILURE TO FULFIL OBLIGATIONS UNDER ARTICLE 169 - PARALLEL INITIATION OF PROCEDURE UNDER ARTICLE 93 OF THE TREATY - APPLICATION NOT DEVOID OF PURPOSE
( EEC TREATY , ARTS . 92 , 93 , 95 AND 169 )
3 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - SUGAR - NATIONAL ADAPTATION AIDS - METHOD OF FINANCING - COMPATIBILITY WITH COMMUNITY LAW - CONDITIONS
( REGULATION NO 3330/74 OF THE COUNCIL , ART . 38 )
4 . TAX PROVISIONS - INTERNAL TAXATION - DISCRIMINATION - CRITERIA FOR APPRAISAL - PURPOSE TO WHICH REVENUE FROM THE CHARGE IS PUT - FINANCING AIDS FOR THE SOLE BENEFIT OF DOMESTIC PRODUCTS - NOT PERMISSIBLE
( EEC TREATY , ART . 95 )
5 . TAX PROVISIONS - INTERNAL TAXATION - CONCEPT - PASSING FINANCIAL BURDENS ON TO THE CONSUMER - NO EFFECT
( EEC TREATY , ART . 95 )

1 . A MEASURE CARRIED OUT BY MEANS OF DISCRIMINATORY TAXATION , WHICH MAY BE CONSIDERED AT THE SAME TIME AS FORMING PART OF AN AID WITHIN THE MEANING OF ARTICLE 92 OF THE EEC TREATY , IS GOVERNED BOTH BY THE PROVISIONS OF THE FIRST PARAGRAPH OF ARTICLE 95 AND BY THOSE APPLICABLE TO AIDS GRANTED BY STATES . IT FOLLOWS THAT DISCRIMINATORY TAX PRACTICES ARE NOT EXEMPTED FROM THE APPLICATION OF ARTICLE 95 BY REASON OF THE FACT THAT THEY MAY AT THE SAME TIME BE DESCRIBED AS A MEANS OF FINANCING A STATE AID .

2 . IF THE COMMISSION CHARGES A MEMBER STATE WITH PRACTICES WHICH CONSTITUTE AN INFRINGEMENT OF ARTICLE 95 OF THE EEC TREATY AND IF ON THAT BASIS IT HAS INITIATED THE PROCEDURE UNDER ARTICLE 169 THAT PROCEDURE DOES NOT LOSE ITS PURPOSE BECAUSE THE COMMISSION TAKES THE VIEW THAT THE SAME PRACTICES FORM PART OF A SYSTEM OF AIDS INCOMPATIBLE WITH THE COMMON MARKET AND INITIATES THE PROCEDURE PROVIDED FOR IN ARTICLE 93 .
3 . AUTHORIZATION UNDER ARTICLE 38 OF REGULATION ( EEC ) NO 3330/74 TO GRANT THE AIDS PROVIDED FOR THEREIN CANNOT BE TAKEN TO MEAN THAT ANY METHOD OF FINANCING SUCH AIDS , WHATEVER ITS CHARACTER OR CONDITIONS , IS COMPATIBLE WITH COMMUNITY LAW . ON THE CONTRARY , THE FINANCING OF THE AID GRANTED , THE NATIONAL AUTHORITIES REMAIN IN PARTICULAR SUBJECT TO THE OBLIGATIONS ARISING UNDER THE EEC TREATY .

4 . IN AN INTERPRETATION OF THE CONCEPT ' ' INTERNAL TAXATION ' ' FOR THE PURPOSES OF ARTICLE 95 OF THE EEC TREATY IT MAY BE NECESSARY TO TAKE INTO ACCOUNT THE PURPOSE TO WHICH THE REVENUE FROM THE CHARGE IS PUT . IN FACT , IF THE REVENUE FROM SUCH A CHARGE IS INTENDED TO FINANCE ACTIVITIES FOR THE SPECIAL ADVANTAGE OF THE TAXED DOMESTIC PRODUCTS IT MAY FOLLOW THAT THE CHARGE IMPOSED ON THE BASIS OF THE SAME CRITERIA ON DOMESTIC AND IMPORTED PRODUCTS NEVERTHELESS CONSTITUTES DISCRIMINATORY TAXATION IN SO FAR AS THE FISCAL BURDEN ON DOMESTIC PRODUCTS IS NEUTRALIZED BY THE ADVANTAGES WHICH THE CHARGE IS USED TO FINANCE WHILST THE CHARGE ON THE IMPORTED PRODUCTS CONSTITUTES A NET BURDEN .

IT FOLLOWS THAT INTERNAL TAXATION IS OF SUCH A NATURE AS INDIRECTLY TO IMPOSE A HEAVIER BURDEN ON PRODUCTS FROM OTHER MEMBER STATES THAN ON DOMESTIC PRODUCTS IF IT IS USED EXCLUSIVELY OR PRINCIPALLY TO FINANCE AIDS FOR THE SOLE BENEFIT OF DOMESTIC PRODUCTS .

5 . THE FACT THAT THE FINANCIAL BURDENS ARISING FROM THE IMPOSITION OF A CHARGE ARE PASSED ON TO THE CONSUMERS DOES NOT ALTER THE LEGAL NATURE OF THE CHARGE IN QUESTION AS REGARDS ARTICLE 95 OF THE EEC TREATY .

IN CASE 73/79
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ANTONIO ABATE , ITS LEGAL ADVISER , ACTING AS AGENT , ASSISTED BY PROFESSOR GIOVANNI PUOTI , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MARIO CERVINO , JEAN MONNET BUILDING , KIRCHBERG ,
APPLICANT ,
V
ITALIAN REPUBLIC , REPRESENTED BY ITS AMBASSADOR , ADOLFO MARESCA , ACTING AS AGENT , ASSISTED BY IVO MARIA BRAGUGLIA , AVVOCATO DELLO STATO , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY ,
DEFENDANT ,

APPLICATION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE ITALIAN REPUBLIC , BY IMPOSING A SPECIAL CHARGE , WHICH IS NOT UNIFORM , ON DOMESTICALLY-PRODUCED SUGAR AND SUGAR IMPORTED FROM OTHER MEMBER STATES , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY ,

1 BY AN APPLICATION WHICH WAS LODGED AT THE COURT REGISTRY ON 2 MAY 1979 THE COMMISSION INSTITUTED PROCEEDINGS BEFORE THE COURT OF JUSTICE PURSUANT TO ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE ITALIAN REPUBLIC , BY IMPOSING A SPECIAL TAX , WHICH IS NOT UNIFORM , ON DOMESTICALLY-PRODUCED SUGAR AND SUGAR IMPORTED FROM OTHER MEMBER STATES , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE TREATY .

2 THE FILE SHOWS THAT THE NATIONAL TAX , TERMED ' ' SOVRAPPREZZO ' ' ( SURCHARGE ), WHICH FORMS THE SUBJECT-MATTER OF THESE PROCEEDINGS , IS A CHARGE ON WHITE SUGAR RELEASED FOR CONSUMPTION IN ITALY . IT IMPOSES AN EQUAL CHARGE PER NET KILOGRAM OF WHITE SUGAR OF ANY TYPE AND QUALITY ON BOTH DOMESTICALLY-PRODUCED SUGAR AND SUGAR FROM OTHER MEMBER STATES . THE CHARGE IS PAID TO THE CASSA CONGUAGLIO ZUCCHERO ( SUGAR EQUALIZATION FUND , HEREINAFTER REFERRED TO AS ' ' THE FUND ' ' ) WHICH IS A PUBLIC AGENCY SET UP IN ORDER TO EFFECT THE EQUALIZATION OPERATIONS RELATED TO THE INTRODUCTION OF THE ITALIAN SUGAR INDUSTRY INTO THE COMMON ORGANIZATION OF THE MARKET IN SUGAR IN THE FORM WHICH IT HAS HAD SINCE 1968 . THE REVENUE FROM THE SURCHARGE IS INTENDED PRINCIPALLY FOR THE FINANCING OF ADAPTATION AIDS FOR WHICH THE SUGAR INDUSTRY AND BEET-PRODUCERS IN ITALY QUALIFY IN ACCORDANCE WITH THE RELEVANT COMMUNITY RULES . THE GRANT OF SUCH ADAPTATION AIDS IS AT PRESENT BASED ON ARTICLE 38 OF REGULATION ( EEC ) NO 3330/74 OF THE COUNCIL OF 19 DECEMBER 1974 ON THE COMMON ORGANIZATION OF THE MARKET IN SUGAR ( OFFICIAL JOURNAL 1974 , L 359 , P . 1 ).

3 THE COMMISSION CONSIDERS THAT THE IMPOSITION OF THE SURCHARGE IS CONTRARY TO THE FIRST PARAGRAPH OF ARTICLE 95 OF THE TREATY IN SO FAR AS IT IS INTENDED TO FINANCE AIDS GRANTED IN FAVOUR OF DOMESTIC PRODUCTS TO THE EXCLUSION OF PRODUCTS FROM OTHER MEMBER STATES . ALTHOUGH THE CHARGE IS APPLIED TO DOMESTIC SUGAR AND IMPORTED SUGAR ON THE BASIS OF IDENTICAL CRITERIA THE TAXATION ON DOMESTIC SUGAR IS PARTIALLY NEUTRALIZED BY THE GRANTING OF THE AIDS THEREBY FINANCED . THAT NEUTRALIZATION IS ALLEGED TO BE ALL THE CLEARER INASMUCH AS PRODUCERS OF SUGAR ESTABLISHED IN ITALY MAY PAY THE AMOUNT OF THE SURCHARGE DUE AFTER DEDUCTION OF THE AIDS TO WHICH THEY ARE ENTITLED .

4 THE ITALIAN GOVERNMENT CONCEDES THAT THE REVENUE FROM THE SURCHARGE IS PRINCIPALLY BUT NOT EXCLUSIVELY INTENDED TO FINANCE ADAPTATION AIDS AUTHORIZED UNDER THE COMMUNITY RULES , BUT IT EXPLAINS THAT SINCE 1976 THE SET-OFF EFFECTED BY THE FUND BETWEEN THE AMOUNT OF THE CHARGE AND THE AMOUNT OF THE AID IN FAVOUR OF ITALIAN PRODUCERS IS ONLY PARTIAL .

5 THE ITALIAN GOVERNMENT CLAIMS THAT THE APPLICATION IS INADMISSIBLE AND FURTHERMORE DENIES THAT THE SYSTEM THUS SET UP IS INCOMPATIBLE WITH ARTICLE 95 OF THE TREATY .

ADMISSIBILITY
6 THE ITALIAN GOVERNMENT FIRST RECALLS THAT THE SURCHARGE IS APPLIED UNIFORMLY TO DOMESTIC PRODUCTS AND TO IMPORTED PRODUCTS AND STATES THAT THE COMMISSION DOES NOT CONSIDER THE INTERNAL TAXATION IN QUESTION DISCRIMINATORY FROM THE FISCAL POINT OF VIEW , BUT ONLY IN SO FAR AS IT IS USED FOR FINANCING DOMESTIC PRODUCTS . ACCORDING TO THE ITALIAN GOVERNMENT IT IS HOWEVER POSSIBLE TO CONSIDER THE LAWFULNESS OF THE SYSTEM OF FINANCING AN AID ONLY WITHIN THE FRAMEWORK OF THE SPECIAL PROCEDURE LAID DOWN FOR THAT PURPOSE IN ARTICLE 93 OF THE TREATY . THE CASE-LAW OF THE COURT OF JUSTICE , AS IT IS ILLUSTRATED IN PARTICULAR BY THE JUDGMENT OF 25 JUNE 1970 ( CASE 47/69 , FRANCE V COMMISSION , ( 1970 ) ECR 487 ), HAS IN FACT EMPHASIZED THAT THE METHOD OF FINANCING AN AID CANNOT BE ISOLATED FROM CONSIDERATION OF THE AID PROPERLY SO-CALLED . CONSEQUENTLY THE NATIONAL MEASURES REFERRED TO BY THE COMMISSION CANNOT BE JUDGED WITHIN THE FRAMEWORK OF AN APPLICATION UNDER ARTICLE 169 OF THE TREATY , BUT ONLY IN ACCORDANCE WITH THE PROCEDURE UNDER ARTICLE 93 OF THE TREATY .

7 THE ITALIAN GOVERNMENT FURTHER CLAIMS THAT THE COMMISSION HAS ALREADY INITIATED THE PROCEDURE LAID DOWN IN ARTICLE 93 IN ORDER TO CONSIDER THE SYSTEM OF FINANCING ALL THE AIDS GRANTED TO BEET-PRODUCERS AND SUGAR-PROCESSERS AND THAT THAT PROCEDURE COVERS THE FINANCING OF ADAPTATION AIDS BY MEANS OF THE IMPOSITION OF THE SURCHARGE . THE PROCEDURE THUS INITIATED MAY BRING ABOUT THE MODIFICATION OR ABOLITION OF THE PRESENT SYSTEM OF FINANCING AND THUS RENDER THE APPLICATION BASED ON ARTICLE 169 DEVOID OF PURPOSE ; THIS APPLICATION IS ACCORDINGLY INADMISSIBLE .

8 THE FIRST OBJECTION OF INADMISSIBILITY MUST BE DISMISSED . COMPARISON BETWEEN ON THE ONE HAND ARTICLES 92 AND 93 OF THE TREATY AND THE FIRST PARAGRAPH OF ARTICLE 95 ON THE OTHER SHOWS THAT THOSE PROVISIONS PURSUE THE SAME OBJECTIVE WHICH IS TO ENSURE THAT THE TWO CATEGORIES OF INTERVENTION ON THE PART OF A MEMBER STATE , NAMELY THE GRANT OF AIDS ON THE ONE HAND AND THE IMPOSITION OF DISCRIMINATORY TAXATION ON THE OTHER , DO NOT DISTORT THE CONDITIONS OF COMPETITION WITHIN THE COMMON MARKET . HOWEVER , AS THE COURT HAS ALREADY STATED IN A COMPARABLE CASE , IN ITS JUDGMENT OF 13 MARCH 1979 ( CASE 91/78 , HANSEN , ( 1979 ) ECR 935 ), THE APPLICATION OF THOSE PROVISIONS PRESUPPOSES DISTINCT CONDITIONS PECULIAR TO THE TWO KINDS OF STATE MEASURE WHICH THEY ARE INTENDED TO GOVERN AND THEY DIFFER FURTHERMORE AS TO THEIR LEGAL CONSEQUENCES , ABOVE ALL INASMUCH AS IN THE IMPLEMENTATION OF ARTICLES 92 AND 93 , UNLIKE THE FIRST PARAGRAPH OF ARTICLE 95 , THE INTERVENTION OF THE COMMISSION PLAYS A LARGE PART .

9 THESE FINDINGS DO NOT RULE OUT THE POSSIBILITY THAT A MEASURE CARRIED OUT BY MEANS OF DISCRIMINATORY TAXATION , WHICH MAY BE CONSIDERED AT THE SAME TIME AS FORMING PART OF AN AID WITHIN THE MEANING OF ARTICLE 92 , MAY BE GOVERNED BOTH BY THE PROVISIONS OF THE FIRST PARAGRAPH OF ARTICLE 95 AND BY THOSE APPLICABLE TO AIDS GRANTED BY STATES . IT FOLLOWS THAT DISCRIMINATORY TAX PRACTICES ARE NOT EXEMPTED FROM THE APPLICATION OF ARTICLE 95 BY REASON OF THE FACT THAT THEY MAY AT THE SAME TIME BE DESCRIBED AS A MEANS OF FINANCING A STATE AID AND THAT THEY MAY CONSEQUENTLY FORM THE SUBJECT-MATTER OF A DISTINCT PROCEDURE UNDER ARTICLE 169 .
10 IN THOSE CIRCUMSTANCES THE SECOND OBJECTION OF INADMISSIBILITY MUST ALSO BE OVERRULED . IF THE COMMISSION CHARGES A MEMBER STATE WITH PRACTICES WHICH CONSTITUTE AN INFRINGEMENT OF ARTICLE 95 AND IF ON THAT BASIS IT HAS INITIATED THE PROCEDURE UNDER ARTICLE 169 THAT PROCEDURE DOES NOT LOSE ITS PURPOSE BECAUSE THE COMMISSION TAKES THE VIEW THAT THE SAME PRACTICES FORM PART OF A SYSTEM OF AIDS INCOMPATIBLE WITH THE COMMON MARKET AND INITIATES THE PROCEDURE PROVIDED FOR IN ARTICLES 92 AND 93 .
11 IT MUST FURTHER BE OBSERVED THAT WHILST THE PROCEDURE PROVIDED FOR IN ARTICLES 92 AND 93 LEAVES A WIDE DISCRETION TO THE COMMISSION , AND IN CERTAIN CONDITIONS TO THE COUNCIL , TO COME TO A DECISION REGARDING THE COMPATIBILITY OF A SYSTEM OF AIDS GRANTED BY STATES WITH THE REQUIREMENTS OF THE COMMON MARKET IT IS CLEAR FROM THE GENERAL PLAN OF THE TREATY THAT THAT PROCEDURE MUST NEVER PRODUCE A RESULT WHICH IS CONTRARY TO THE SPECIFIC PROVISIONS OF THE TREATY CONCERNING , FOR EXAMPLE , INTERNAL TAXATION . IF THE COURT IS LED TO DECLARE THE IMPOSITION OF THE SURCHARGE TO THE PROVISIONS OF ARTICLE 95 THE PROCEDURE WHICH THE COMMISSION HAS INITIATED UNDER ARTICLES 92 UND 93 CANNOT IN CONSEQUENCE LEAD TO MAINTAINING THAT CHARGE IN ITS PRESENT FORM . CONSEQUENTLY THE PROCEEDINGS INSTITUTED UNDER ARTICLE 169 AGAINST A MEMBER STATE CANNOT BE SUCH AS TO JEOPARDIZE THE INTEREST WHICH THE MEMBER STATE MAY HAVE IN MAINTAINING A SYSTEM OF AIDS HELD COMPATIBLE WITH THE REQUIREMENTS OF THE COMMON MARKET AS A RESULT OF A PROCEDURE INITIATED UNDER ARTICLES 92 AND 93 .
INFRINGEMENT OF ARTICLE 95 OF THE TREATY
12 THE FIRST PARAGRAPH OF ARTICLE 95 OF THE TREATY PROHIBITS MEMBER STATES FROM IMPOSING , 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 .

13 THE ITALIAN GOVERNMENT CLAIMS FIRST OF ALL THAT THE SURCHARGE CONSTITUTES AN IDENTICAL BURDEN ON SUGAR PRODUCED IN ITALY AND IMPORTED SUGAR AND THAT THE DISCRIMINATION OF WHICH THE COMMISSION COMPLAINS RESIDES IN THE AMOUNT OF THE AID GRANTED FOR DOMESTIC SUGAR . THAT AID IS AUTHORIZED UNDER ARTICLE 38 OF REGULATION NO 3330/74 ; ITS OBJECTIVE IS TO COMPENSATE FOR THE ECONOMIC DIFFERENCE IN THE SUGAR SECTOR BETWEEN ITALY AND THE OTHER MEMBER STATES IN ORDER TO ENSURE THE INTEGRATION OF THE ITALIAN SUGAR INDUSTRY INTO THE COMMUNITY SYSTEM . ACCORDINGLY THE AID IN QUESTION MUST CONSTITUTE A CLEAR AND CONSTANT DIFFERENCE IN FAVOUR OF ITALIAN SUGAR .

14 IN CONNEXION WITH THIS LAST POINT IT SHOULD BE RECALLED THAT THE COURT HAS ALREADY DECLARED , IN ITS JUDGMENT OF 25 MAY 1977 ( CASE 105/76 , INTERZUCCHERI , ( 1977 ) ECR 1029 ) THAT AUTHORIZATION UNDER ARTICLE 38 OF REGULATION ( EEC ) NO 3330/74 TO GRANT THE AIDS PROVIDED FOR THEREIN CANNOT BE TAKEN TO MEAN THAT ANY METHOD OF FINANCING SUCH AIDS , WHATEVER ITS CHARACTER OR CONDITIONS , IS COMPATIBLE WITH COMMUNITY LAW AND THAT IN THE FINANCING OF THE AID GRANTED , THE NATIONAL AUTHORITIES REMAIN IN PARTICULAR SUBJECT TO THE OBLIGATIONS ARISING UNDER THE TREATY .

15 THE SURCHARGE IS INDEED A CHARGE IMPOSED ON DOMESTIC PRODUCTS AND IMPORTED PRODUCTS ON THE BASIS OF IDENTICAL CRITERIA . HOWEVER , IN AN INTERPRET ATION OF THE CONCEPT ' ' INTERNAL TAXATION ' ' FOR THE PURPOSES OF ARTICLE 95 IT MAY BE NECESSARY TO TAKE INTO ACCOUNT THE PURPOSE TO WHICH THE REVENUE FROM THE CHARGE IS PUT . IN FACT , IF THE REVENUE FROM SUCH A CHARGE IS INTENDED TO FINANCE ACTIVITIES FOR THE SPECIAL ADVANTAGE OF THE TAXED DOMESTIC PRODUCTS IT MAY FOLLOW THAT THE CHARGE IMPOSED ON THE BASIS OF THE SAME CRITERIA NEVERTHELESS CONSTITUTES DISCRIMINATORY TAXATION IN SO FAR AS THE FISCAL BURDEN ON DOMESTIC PRODUCTS IS NEUTRALIZED BY THE ADVANTAGES WHICH THE CHARGE IS USED TO FINANCE WHILST THE CHARGE ON THE IMPORTED PRODUCTS CONSTITUTES A NET BURDEN .

16 IT FOLLOWS THAT INTERNAL TAXATION IS OF SUCH A NATURE AS INDIRECTLY TO IMPOSE A HEAVIER BURDEN ON PRODUCTS FROM OTHER MEMBER STATES THAN ON DOMESTIC PRODUCTS IF IT IS USED EXCLUSIVELY OR PRINCIPALLY TO FINANCE AIDS FOR THE SOLE BENEFIT OF DOMESTIC PRODUCTS .

17 THE ITALIAN GOVERNMENT OBJECTS THAT SUCH AN ATTITUDE WOULD LEAD IN THIS CASE TO ADOPTING A FORMALISTIC VIEW OF ARTICLE 95 . IT CLAIMS THAT IN FACT IT WOULD BE PERMISSIBLE FOR THE ITALIAN REPUBLIC TO MAINTAIN THE SURCHARGE AS IT IS AT PRESENT APPLIED IF THE REVENUE FROM THAT CHARGE WERE PAID TO THE ITALIAN TREASURY AND THENCE INTO THE GENERAL BUDGET OF THE STATE ; THE GOVERNMENT COULD THEN PROVIDE FROM THAT BUDGET THE FUNDS INTENDED FOR FINANCING THE AIDS AUTHORIZED BY ARTICLE 38 OF REGULATION NO 3330/74 . IN THAT CASE , TOO , THE IMPORTED PRODUCT WOULD BE NO BETTER OFF THAN AT PRESENT SINCE THE SURCHARGE WOULD CONTINUE TO BE IMPOSED ON IT WITHOUT BENEFITING AIDS GRANTED FOR THE DOMESTIC PRODUCT .

18 IT MUST BE OBSERVED THAT THE SITUATION ENVISAGED BY THE ITALIAN GOVERNMENT IS NOT COMPARABLE TO THAT WHICH FORMS THE SUBJECT-MATTER OF THIS ACTION . THESE PROCEEDINGS CONCERN THE SURCHARGE , IN ITS CAPACITY AS TAXATION WHICH , ALTHOUGH IMPOSING AN EQUAL CHARGE ON DOMESTIC SUGAR AND IMPORTED SUGAR , IS ALLOTTED TO THE FINANCING OF AIDS FOR THE BENEFIT OF DOMESTIC SUGAR . IF THE SURCHARGE WERE NOT IN THE NATURE OF TAXATION ALLOTTED TO THE FINANCING OF AIDS FOR THE DOMESTIC PRODUCT THE CONDITIONS FOR THE APPLICATION OF ARTICLE 95 WOULD NOT BE PRESENT . IN THAT CASE HOWEVER THE GRANT OF THE ADAPTATION AIDS WOULD NO LONGER BE THE AUTOMATIC RESULT OF EQUALIZATION ARRANGEMENTS BURDENING ONLY THE SUGAR-PRODUCTION AND IMPORTATION SECTORS BUT WOULD HAVE ITS ORIGIN IN LEGISLATIVE OR GOVERNMENTAL DECISIONS IN WHICH THE DIFFERENT TRADE INTERESTS IN QUESTION WERE BROUGHT INTO EQUILIBRIUM .

19 FINALLY THE ITALIAN GOVERNMENT EMPHASIZES THAT THE SURCHARGE IS IMPOSED ON SUGAR RELEASED FOR CONSUMPTION AND THAT THE CHARGE WHICH IT REPRESENTS FORMS AN INTEGRAL PART OF THE SELLING PRICE OF THE SUGAR . IT FOLLOWS , IN ITS VIEW , THAT THE CHARGE IN QUESTION IS ULTIMATELY BORNE BY THE CONSUMER OF THE PRODUCT AND THAT THE PRODUCERS AND IMPORTERS OF THE SUGAR ARE ACTING ON BEHALF OF THE CONSUMER WHEN THEY PAY THE AMOUNT OF THE CHARGE .

20 HOWEVER , AS THE COMMISSION PERTINENTLY REMARKS , THE FACT THAT THE FINANCIAL BURDENS ARISING FROM THE IMPOSITION OF A CHARGE ARE PASSED ON TO THE CONSUMERS DOES NOT ALTER THE LEGAL NATURE OF THE CHARGE IN QUESTION . FURTHERMORE THE ITALIAN GOVERNMENT HAS NOT CONTESTED THE FACT THAT THE SURCHARGE IS IMPOSED ON PRODUCERS AND IMPORTERS OF SUGAR . THE FACT , ALLEGED BY THE ITALIAN GOVERNMENT , THAT THE SELLING PRICES OF SUGAR IN ITALY AT THE VARIOUS STAGES OF MARKETING INCLUDE THE AMOUNT OF THE SURCHARGE IS IRRELEVANT IN CLASSIFYING IT IN RELATION TO ARTICLE 95 OF THE TREATY .

21 IT FOLLOWS FROM THE FOREGOING THAT THE ARGUMENTS ADVANCED BY THE ITALIAN GOVERNMENT CANNOT BE UPHELD .

22 CONSEQUENTLY THE SURCHARGE MUST BE CONSIDERED AS A CHARGE WHICH , ALTHOUGH LEVIED AT THE SAME RATE ON SUGAR PRODUCED IN ITALY AND SUGAR FROM OTHER MEMBER STATES , DOES NOT CONSTITUTE A UNIFORM IMPOSITION ON THOSE PRODUCTS SINCE IT CONSTITUTES AN UNEQUAL BURDEN ON THE DOMESTIC PRODUCTS WHICH BENEFIT FROM ITS IMPOSITION AND ON THE IMPORTED PRODUCTS WHICH ARE LIABLE TO THE CHARGE BUT DO NOT DERIVE THE BENEFIT .

23 IT MUST THUS BE DECLARED THAT THE ITALIAN REPUBLIC , BY IMPOSING INTERNAL TAXATION THE BURDEN OF WHICH FALLS UNEQUALLY ON SUGAR PRODUCED IN ITALY AND ON THAT IMPORTED FROM OTHER MEMBER STATES , HAS FAILED TO FULFIL AN OBLIGATION UNDER ARTICLE 95 OF THE TREATY .

24 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS IF THEY HAVE BEEN ASKED FOR IN THE SUCCESSFUL PARTY ' S PLEADING . IN THIS CASE THE DEFENDANT HAS BEEN UNSUCCESSFUL IN ITS SUBMISSIONS ; IT MUST THEREFORE BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS ,
THE COURT
HEREBY :
1 . DECLARES THAT THE ITALIAN REPUBLIC , BY IMPOSING INTERNAL TAXATION THE BURDEN OF WHICH FALLS UNEQUALLY ON SUGAR PRODUCED IN ITALY AND ON THAT IMPORTED FROM OTHER MEMBER STATES , HAS FAILED TO FULFIL AN OBLIGATION UNDER ARTICLE 95 OF THE TREATY ;

2 . ORDERS THE DEFENDANT TO PAY THE COSTS .