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URL: http://www.bailii.org/eu/cases/EUECJ/1982/C4182.html
Cite as: [1982] EUECJ C-41/82

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IMPORTANT LEGAL NOTICE - The source of this judgment is the web site of the Court of Justice of the European Communities. The information in this database has been provided free of charge and is subject to a Court of Justice of the European Communities disclaimer and a copyright notice. This electronic version is not authentic and is subject to amendment.

61982J0041
Judgment of the Court of 7 December 1982.
Commission of the European Communities v Italian Republic.
Failure of a State to fulfil an obligation - Directive on the exxcise duty on manufactured tobacco.
Case 41/82.
European Court reports 1982 Page 04213

MEMBER STATES - OBLIGATIONS - IMPLEMENTATION OF DIRECTIVES - FAILURE TO FULFIL - JUSTIFICATION BASED ON INTERNAL LEGAL SYSTEM - NOT POSSIBLE
( EEC TREATY , ARTS 169 AND 189 , THIRD PARAGRAPH )

A MEMBER STATE MAY NOT PLEAD PROVISIONS , PRACTICES OR CIRCUMSTANCES EXISTING IN ITS INTERNAL LEGAL SYSTEM IN ORDER TO JUSTIFY A FAILURE TO COMPLY WITH OBLIGATIONS AND TIME-LIMITS RESULTING FROM COMMUNITY DIRECTIVES .

IN CASE 41/82
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY DAVID GILMOUR , LEGAL ADVISER , ACTING AS AGENT , ASSISTED BY GUIDO BERARDIS , A MEMBER OF ITS LEGAL DEPARTMENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , JEAN MONNET BUILDING , KIRCHBERG ,
APPLICANT ,
V
ITALIAN REPUBLIC , REPRESENTED BY THE AVVOCATURA DELLO STATO ( OFFICE OF THE STATE ADVOCATE ), IN THE PERSON OF OSCAR FIUMARA , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY ,
DEFENDANT ,

APPLICATION FOR A DECLARATION THAT BY NOT ADOPTING WITHIN THE PRESCRIBED PERIOD THE PROVISIONS NEEDED TO COMPLY WITH COUNCIL DIRECTIVE 72/464 OF 19 DECEMBER 1972 ON TAXES OTHER THAN TURNOVER TAXES WHICH AFFECT THE CONSUMPTION OF MANUFACTURED TOBACCO ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION , L 303 AND 306 , 31 . 12 . 1972 , P . 1 ) - AND COUNCIL DIRECTIVE 77/805 OF 19 DECEMBER 1977 AMENDING DIRECTIVE 72/464 ( OFFICIAL JOURNAL 1977 , L 388 , P . 22 ), THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY ,

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 4 FEBRUARY 1982 THE COMMISSION BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT BY NOT ADOPTING THE PROVISIONS NEEDED TO COMPLY WITH COUNCIL DIRECTIVES 72/464 OF 19 DECEMBER 1972 AND 77/805 OF 19 DECEMBER 1977 ON TAXES OTHER THAN TURNOVER TAXES WHICH AFFECT THE CONSUMPTION OF MANUFACTURED TOBACCO ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION , L 303 AND 306 , 31 . 12 . 1972 , P . 1 AND OFFICIAL JOURNAL 1977 , L 338 , P . 22 ) THE ITALIAN REPUBLIC HAD FAILED TO FULFIL ITS OBLIGATIONS UNDER THE THIRD PARAGRAPH OF ARTICLE 189 OF THE EEC TREATY .

2 THE AIM OF COUNCIL DIRECTIVE 72/464 IS THE HARMONIZATION OF THE TAX STRUCTURES AFFECTING THE CONSUMPTION OF MANUFACTURED TOBACCO IN ORDER PROGRESSIVELY TO ELIMINATE FROM THE VARIOUS NATIONAL SYSTEMS THOSE FACTORS WHICH ARE LIKELY TO HINDER FREE MOVEMENT AND DISTORT THE CONDITIONS OF COMPETITION . TO ACCOMPLISH THIS , THE COMMUNITY LEGISLATURE CREATED A SYSTEM WHICH PROVIDES FOR A DEGRESSION IN THE INCIDENCE OF THE TAX AND WHICH , FOR THE TAX AFFECTING THE CONSUMPTION OF CIGARETTES ( EXCISE DUTY ), CONSISTS OF A PROPORTIONAL EXCISE DUTY COMBINED WITH A SPECIFIC EXCISE DUTY , THE AMOUNT OF WHICH IS FIXED BY EACH MEMBER STATE IN ACCORDANCE WITH COMMUNITY CRITERIA . UNDER ARTICLE 4 OF THE DIRECTIVE THE PROPORTIONAL EXCISE DUTY IS TO BE CALCULATED ON THE MAXIMUM RETAIL SELLING PRICE , INCLUDING CUSTOMS DUTIES , WHILST THE SPECIFIC EXCISE DUTY IS CALCULATED PER UNIT OF THE PRODUCT . THE RATE OF THE PROPORTIONAL EXCISE DUTY AND THE AMOUNT OF THE SPECIFC EXCISE DUTY MUST BE THE SAME FOR ALL CIGARETTES .

3 ARTICLE 8 OF THE ABOVE-MENTIONED DIRECTIVE REQUIRES MEMBER STATES TO FIX THE AMOUNT OF THE SPECIFIC EXCISE DUTY LEVIED ON THE CIGARETTES UNDER COMMON RULES AND FOR THE FIRST TIME BY REFERENCE TO CIGARETTES IN THE MOST POPULAR PRICE CATEGORY ACCORDING TO THE DATA AVAILABLE ON 1 JANUARY 1973 . ARTICLE 8 ( 2 ) PROVIDES THAT THE AMOUNT MUST NOT BE LOWER THAN 5% OR HIGHER THAN 75% OF THE AGGREGATE AMOUNT OF THE EXCISE DUTY ( THE SPECIFIC AND PROPORTIONAL AD VALOREM COMPONENTS ) LEVIED ON THOSE CIGARETTES .

4 ARTICLE 12 OF THE DIRECTIVE PROVIDES THAT THE MEMBER STATES ARE TO BRING INTO FORCE THE PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION NECESSARY TO COMPLY WITH THE PROVISIONS OF THE DIRECTIVE NOT LATER THAN 1 JULY 1973 AND ARE TO INFORM THE COMMISSION IMMEDIATELY THAT THEY HAVE DONE SO .

5 IT APPEARS THAT UNTIL OCTOBER 1976 , THE COMMISSION RAISED NO OBJECTION REGARDING ITALY ' S FAILURE TO COMPLY WITH ARTICLE 8 ( 2 ) OF THE DIRECTIVE CONCERNING THE SPECIFIC COMPONENT OF THE EXCISE DUTY ON CIGARETTES .

6 FOLLOWING THE INCREASE OF 2 OCTOBER 1976 IN THE PRICE OF CIGARETTES IN ITALY AND CONSEQUENTLY IN THE BASIC AMOUNT SUBJECT TO THE AD VALOREM EXCISE DUTY , THE COMMISSION NOTED THAT THE SPECIFIC TAX REPRESENTED ONLY 3.96% OF THE AGGREGATE AMOUNT OF THE EXCISE DUTIES , INSTEAD OF THE PRESCRIBED MINIMUM OF 5% . THE COMMISSION , THEREFORE , BY LETTER OF 8 JULY 1977 GAVE NOTICE OF THAT FACT TO THE ITALIAN GOVERNMENT .

7 THE ITALIAN GOVERNMENT , BY LETTER OF 27 SEPTEMBER 1977 , STATED THAT THE PRICE OF THE BEST-SELLING CIGARETTES ON THE ITALIAN MARKET HAD ALREADY BEEN INCREASED BY MINISTERIAL ORDER OF 4 MARCH 1976 FROM LIT 250 TO LIT 400 PER PACKET OF 20 CIGARETTES . THIS HAD THE EFFECT OF RAISING THE PERCENTAGE OF THE SPECIFIC COMPONENT TO 4.5% ( IN RELATION TO THE AGGREGATE AMOUNT OF THE EXCISE DUTY ) AND THE COMMISSION HAD MADE NO OBJECTION TO THIS . IN THE VIEW OF THE ITALIAN GOVERNMENT , DIRECTIVE 72/464 DID NOT ENVISAGE THE AUTOMATIC ADAPTATION OF THE SYSTEM TO VARIATIONS IN THE ECONOMIC AND COMMERCIAL COMPONENTS OF THE VARIOUS PRICES WHICH ARE NOT RELATED TO TAX .

8 IN THE MEANTIME DIRECTIVE 77/805 OF 19 NOVEMBER 1977 ENTERED INTO FORCE AND THEREBY INITIATED THE SECOND STAGE OF HARMONIZATION OF THE STRUCTURES OF EXCISE DUTY ON MANUFACTURED TOBACCO COVERING THE PERIOD FROM 1 JULY 1978 TO 31 DECEMBER 1980 . THAT DIRECTIVE SUPPLEMENTED DIRECTIVE 72/464 , BY ADDING INTER ALIA ARTICLE 10 ( B ). PURSUANT TO ARTICLE 10 ( B ) ( 1 ), THE AMOUNT OF THE SPECIFIC EXCISE DUTY IS TO BE ESTABLISHED BY REFERENCE TO CIGARETTES IN THE MOST POPULAR PRICE CATEGORY ACCORDING TO THE INFORMATION AVAILABLE AT 1 JANUARY EACH YEAR , BEGINNING ON 1 JANUARY 1978 .
9 PARAGRAPH ( 2 ) OF THE SAME ARTICLE PROVIDES THAT THE SPECIFIC COMPONENT OF THE EXCISE DUTY MAY NOT BE LESS THAN 5% OR MORE THAN 55% OF THE AMOUNT OF THE TOTAL TAX BURDEN RESULTING FROM THE AGGREGATION OF THE PROPORTIONAL EXCISE DUTY , THE SPECIFIC EXCISE DUTY AND THE TURNOVER TAX LEVIED ON THOSE CIGARETTES .

10 THIS PRODUCED THE RESULT THAT IN ITALY THE PERCENTAGE OF THE SPECIFIC COMPONENT IN RELATION TO THE TOTAL REVENUE FROM THE TAX FELL FROM 3.96% TO 2.36% .

11 BY TELEX MESSAGE OF 23 OCTOBER 1978 , THE ITALIAN GOVERNMENT INFORMED THE COMMISSION THAT THE DRAFT LAW IMPLEMENTING THE SECOND PHASE OF HARMONIZATION ENVISAGED IN DIRECTIVE 77/805 HAD BEEN APPROVED BY THE CONSIGLIO DEI MINISTRI ( ITALIAN COUNCIL OF MINISTERS ) AND WAS BEFORE PARLIAMENT . IT STATED THAT THAT MEASURE ALSO PROVIDED ' ' A SOLUTION TO THE PROBLEM RAISED BY THE COMMISSION IN ITS LETTER NO 7295 OF 8 JULY 1977 CONCERNING CALCULATION OF THE RATIO BETWEEN THE SPECIFIC COMPONENT AND THE AD VALOREM COMPONENT OF THE TAX ' ' .

12 AS THE DRAFT LAW WAS NOT SUBSEQUENTLY ADOPTED BY PARLIAMENT , THE COMMISSION , BY LETTER OF 11 FEBRUARY 1980 , AGAIN GAVE THE ITALIAN GOVERNMENT AN OPPORTUNITY TO SUBMIT ITS OBSERVATIONS . THAT LETTER RECEIVED NO REPLY .

13 ON 31 OCTOBER 1980 , THE COMMISSION DELIVERED A REASONED OPINION TO THE ITALIAN REPUBLIC . THE ITALIAN GOVERNMENT REPLIED BY LETTER OF 2 FEBRUARY 1981 IN WHICH IT STATED THAT A NEW DRAFT LAW HAD BEEN PLACED BEFORE PARLIAMENT ON 16 MAY 1980 WHICH PROVIDED FOR REORGANIZATION OF THE TAX SYSTEM AND THEREBY ENSURED COMPLETE CONFORMITY OF THE NATIONAL LEGISLATION WITH THE COMMUNITY REGULATIONS IN FORCE . THE ITALIAN PARLIAMENT HAS NOT YET ENACTED ANY LEGISLATIVE MEASURE ON THIS MATTER .

14 THE ITALIAN GOVERNMENT DOES NOT DISPUTE THAT IT HAS FAILED TO FULFIL ITS OBLIGATIONS . IT STATES THAT THE DELAY IN ADAPTING ITS LEGISLATION TO THE DIRECTIVES RESULTS FROM THE NEED TO RESORT TO THE LEGISLATIVE PROCESS IN ORDER TO IMPLEMENT THEM . THAT LEADS TO DELAYS RESULTING FROM THE EXIGENCIES AND INCIDENTS OF PARLIAMENTARY BUSINESS . AS A RESULT OF THE EARLY DISSOLUTION OF PARLIAMENT , THE FIRST DRAFT LAW PRESENTED BY THE GOVERNMENT WAS NOT ADOPTED ; AS REGARDS THE SECOND DRAFT LAW , IT WAS STILL BEING EXAMINED BY THE RELEVANT COMMITTEES OF THE CHAMBER OF DEPUTIES .

15 THESE CIRCUMANSTANCES CANNOT EXPUNGE THE FAILURE TO FULFIL ITS OBLIGATIONS , WITH WHICH THE ITALIAN REPUBLIC IS CHARGED . ACCORDING TO WELL-ESTABLISHED CASE-LAW OF THE COURT , A MEMBER STATE MAY NOT PLEAD PROVISIONS , PRACTICES OR CIRCUMSTANCES EXISTING IN ITS INTERNAL LEGAL SYSTEM IN ORDER TO JUSTIFY A FAILURE TO COMPLY WITH OBLIGATIONS AND TIME-LIMITS RESULTING FROM COMMUNITY DIRECTIVES .

16 IT MUST THEREFORE BE DECLARED THAT BY NOT ADOPTING THE PROVISIONS NEEDED IN ORDER TO COMPLY WITH THE DIRECTIVES IN QUESTION , THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY .

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

18 SINCE 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 NOT ADOPTING THE PROVISIONS NEEDED IN ORDER TO COMPLY WITH COUNCIL DIRECTIVES 72/464 OF 19 DECEMBER 1972 AND 77/805 OF 19 DECEMBER 1977 ON TAXES OTHER THAN TURNOVER TAXES WHICH AFFECT THE CONSUMPTION OF MANUFACTURED TOBACCO ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION , L 303 AND 306 , 31 . 12 . 1972 , P . 1 , AND OFFICIAL JOURNAL 1977 , L 338 , P . 22 ), THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY ;

2 . ORDERS THE DEFENDANT TO PAY THE COSTS .