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

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TAX PROVISIONS - INTERNAL TAXATION - PROVISIONS OF THE TREATY - AIM - PROHIBITION OF DISCRIMINATION BETWEEN IMPORTED PRODUCTS AND SIMILAR OR COMPETING DOMESTIC PRODUCTS - SIMILAR OR COMPETING PRODUCTS - ASSESSMENT CRITERIA
( EEC TREATY, ART . 95 )

ARTICLE 95 OF THE TREATY AS A WHOLE AIMS 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, AND TO GUARANTEE THE COMPLETE NEUTRALITY OF INTERNAL TAXATION AS REGARDS COMPETITION BETWEEN DOMESTIC PRODUCTS AND IMPORTED PRODUCTS .
IN ORDER TO ASSESS SIMILARITY BETWEEN DOMESTIC PRODUCTS AND IMPORTED PRODUCTS FOR THE PURPOSES OF THE PROHIBITION SET OUT IN THE FIRST PARAGRAPH OF ARTICLE 95, IT MUST BE CONSIDERED WHETHER THE PRODUCTS IN QUESTION HAVE SIMILAR CHARACTERISTICS AND MEET THE SAME CONSUMER NEEDS . IF THOSE CONDITIONS ARE NOT FULFILLED, THE SECOND PARAGRAPH OF ARTICLE 95 MAY APPLY . THE FUNCTION OF THAT PROVISION 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 OF ARTICLE 95, ARE NEVERTHELESS IN COMPETITION, EVEN PARTIAL, INDIRECT OR POTENTIAL COMPETITION, WITH EACH OTHER .

IN CASE 184/85
COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ENRICO TRAVERSA, A MEMBER OF THE COMMISSION' S LEGAL DEPARTMENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS, ALSO A MEMBER OF THE COMMISSION' S LEGAL DEPARTMENT, JEAN MONNET BUILDING, KIRCHBERG,
APPLICANT,
V
ITALIAN REPUBLIC, REPRESENTED BY LUIGI FERRARI BRAVO, HEAD OF THE DEPARTMENT FOR CONTENTIOUS DIPLOMATIC AFFAIRS, ACTING AS AGENT, ASSISTED BY SERGIO LAPORTA, AVVOCATO DELLO STATO, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY,
DEFENDANT,
APPLICATION FOR A DECLARATION THAT, BY IMPOSING AND MAINTAINING IN FORCE A TAX ON FRESH AND DRIED BANANAS AND ON BANANA MEAL, THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY,
THE COURT
COMPOSED OF : Y . GALMOT, PRESIDENT OF CHAMBER, ACTING AS PRESIDENT, C . KAKOURIS, T . F . O' HIGGINS AND F . SCHOCKWEILER ( PRESIDENTS OF CHAMBERS ), G . BOSCO, T . KOOPMANS, O . DUE, U . EVERLING, K . BAHLMANN, R . JOLIET AND G . C . RODRIGUEZ IGLESIAS, JUDGES,
ADVOCATE GENERAL : C . O . LENZ
REGISTRAR : H . A . RUEHL, PRINCIPAL ADMINISTRATOR
HAVING REGARD TO THE REPORT FOR THE HEARING AND FURTHER TO THE HEARING ON 17 JUNE 1986,
AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 16 OCTOBER 1986,
GIVES THE FOLLOWING
JUDGMENT

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 13 JUNE 1985, THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT, BY IMPOSING AND MAINTAINING IN FORCE A TAX ON THE CONSUMPTION OF FRESH AND DRIED BANANAS AND ON BANANA MEAL, THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY .
2 IT APPEARS FROM THE REASONED OPINION AND FROM THE COMMISSION' S APPLICATION THAT THE FAILURE TO FULFIL OBLIGATIONS WITH WHICH THE ITALIAN GOVERNMENT IS CHARGED RELATES ONLY TO THE APPLICATION OF THE TAX IN QUESTION TO BANANAS FROM OTHER MEMBER STATES, AND IN PARTICULAR TO BANANAS FROM THE FRENCH OVERSEAS DEPARTMENTS .
3 THE APPLICATION IS BASED ESSENTIALLY ON THE VIEW THAT THE TAX ON THE CONSUMPTION OF BANANAS IS PROTECTIONIST AND CONTRARY TO THE PROVISIONS OF ARTICLE 95 WITH REGARD TO TABLE FRUIT TYPICALLY PRODUCED IN ITALY . IT APPEARS FROM THE DOCUMENTS BEFORE THE COURT THAT TABLE FRUIT TYPICALLY PRODUCED IN ITALY INCLUDES APPLES, PEARS, PEACHES, PLUMS, APRICOTS, CHERRIES, ORANGES AND MANDARINS, FOR EXAMPLE .
4 ACCORDING TO THE ITALIAN GOVERNMENT' S REPLY TO A QUESTION PUT BY THE COURT, ITALIAN BANANA PRODUCTION, WHICH IS CONFINED TO SICILY, AMOUNTED TO 120 TONNES IN 1985 . FURTHERMORE, IT IS UNCONTESTED THAT 357*500 TONNES OF BANANAS WERE IMPORTED INTO ITALY IN THAT YEAR .
5 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR THE PROVISIONS OF THE RELEVANT ITALIAN LEGISLATION, THE COURSE OF THE PROCEDURE AND THE SUBMISSIONS AND ARGUMENTS OF THE PARTIES, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY INSOFAR AS IS NECESSARY FOR THE REASONING OF THE COURT .
6 SINCE THE COMMISSION BASED ITS APPLICATION PRINCIPALLY ON THE FIRST PARAGRAPH OF ARTICLE 95, IT MUST FIRST BE CONSIDERED WHETHER THE REQUIREMENTS FOR THE APPLICATION OF THAT PROVISION HAVE BEEN MET .
7 ACCORDING TO THE CASE-LAW OF THE COURT, ARTICLE 95 AS A WHOLE AIMS 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, AND TO GUARANTEE THE COMPLETE NEUTRALITY OF INTERNAL TAXATION AS REGARDS COMPETITION BETWEEN DOMESTIC PRODUCTS AND IMPORTED PRODUCTS . AS FAR AS SIMILAR PRODUCTS ARE CONCERNED, THE FIRST PARAGRAPH OF ARTICLE 95 MORE SPECIFICALLY PROHIBITS ANY TAX PROVISION WHOSE EFFECT IS TO IMPOSE, BY WHATEVER TAX MECHANISM, HIGHER TAXATION ON IMPORTED GOODS THAN ON SIMILAR DOMESTIC PRODUCTS .
8 IN THAT CONNECTION IT MUST BE OBSERVED THAT, AS NOTED ABOVE, ITALIAN BANANA PRODUCTION IS COMPLETELY NEGLIGIBLE AND MUST THEREFORE BE LEFT OUT OF ACCOUNT . CONSEQUENTLY, THE CRITERION OF SIMILARITY ON WHICH THE PROHIBITION SET OUT IN THE FIRST PARAGRAPH OF ARTICLE 95 IS BASED MUST BE ASSESSED IN RELATION TO TABLE FRUIT TYPICALLY PRODUCED IN ITALY .
9 IT MUST THEREFORE BE CONSIDERED, AS THE COURT POINTED OUT IN ITS JUDGMENT OF 17 FEBRUARY 1976 IN CASE 45/75 REWE-ZENTRALE DES LEBENSMITTEL - GROSSHANDELS GMBH V HAUPTZOLLAMT LANDAU PFALZ (( 1976 )) ECR 181, WHETHER BANANAS AND OTHER TABLE FRUIT TYPICALLY PRODUCED IN ITALY HAVE SIMILAR CHARACTERISTICS AND MEET THE SAME CONSUMER NEEDS . CONSEQUENTLY, IN ORDER TO ASSESS SIMILARITY, ACCOUNT MUST BE TAKEN, ON THE ONE HAND, OF A SET OF OBJECTIVE CHARACTERISTICS OF THE TWO CATEGORIES OF PRODUCT IN QUESTION, SUCH AS THEIR ORGANOLEPTIC CHARACTERISTICS AND THEIR WATER CONTENT, AND, ON THE OTHER HAND, WHETHER OR NOT THE TWO CATEGORIES OF FRUIT CAN SATISFY THE SAME CONSUMER NEEDS .
10 IT MUST BE OBSERVED IN THIS CASE THAT THE TWO CATEGORIES OF FRUIT IN QUESTION, THAT IS TO SAY, ON THE ONE HAND, BANANAS, AND, ON THE OTHER, TABLE FRUIT TYPICALLY PRODUCED IN ITALY MENTIONED ABOVE HAVE DIFFERENT CHARACTERISTICS . AS THE COMMISSION HAS CONCEDED, THE ORGANOLEPTIC CHARACTERISTICS AND THE WATER CONTENT OF THE TWO CATEGORIES OF PRODUCT DIFFER . BY WAY OF EXAMPLE, THE HIGHER WATER CONTENT OF PEARS AND OTHER FRUIT TYPICALLY GROWN IN ITALY GIVE THEM THIRST-QUENCHING PROPERTIES WHICH BANANAS DO NOT POSSESS . MOREOVER, THE OBSERVATION OF THE ITALIAN GOVERNMENT, WHICH HAS NOT BEEN CHALLENGED BY THE COMMISSION, THAT THE BANANA IS REGARDED, AT LEAST ON THE ITALIAN MARKET, AS A FOODSTUFF WHICH IS PARTICULARLY NUTRITIOUS, OF A HIGH ENERGY CONTENT AND WELL-SUITED FOR INFANTS MUST BE ACCEPTED . IT MUST THEREFORE BE HELD THAT THOSE TWO CATEGORIES OF FRUIT ARE NOT SIMILAR WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 .
11 SINCE THE REQUIREMENT OF SIMILARITY PRESCRIBED BY THE FIRST PARAGRAPH OF ARTICLE 95 IS NOT FULFILLED, IT MUST BE CONSIDERED WHETHER THE SECOND PARAGRAPH OF ARTICLE 95 MAY APPLY . AS THE COURT STATED IN ITS JUDGMENT OF 27 FEBRUARY 1980 IN CASE 169/78 COMMISSION V ITALY (( 1980 )) ECR 385, THE FUNCTION OF THAT PROVISION 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 OF ARTICLE 95, ARE NEVERTHELESS IN COMPETITION, EVEN PARTIAL, INDIRECT OR POTENTIAL COMPETITION, WITH EACH OTHER .
12 ALTHOUGH BANANAS AND TABLE FRUIT TYPICALLY PRODUCED IN ITALY ARE NOT SIMILAR PRODUCTS WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95, BANANAS DO AFFORD AN ALTERNATIVE CHOICE TO CONSUMERS OF FRUIT . AS A RESULT, BANANAS MUST BE REGARDED AS BEING IN PARTIAL COMPETITION WITH SUCH FRUIT . THEREFORE THE TAXATION OF BANANAS MUST NOT HAVE THE EFFECT OF AFFORDING INDIRECT PROTECTION TO TABLE FRUIT TYPICALLY PRODUCED IN ITALY .
13 THE TAX RULES IN QUESTION ARE CHARACTERIZED BY THE FACT THAT THE RELEVANT CONSUMER TAX DOES NOT APPLY TO THE MOST TYPICAL ITALIAN-PRODUCED TABLE FRUIT . THAT THE TAX IS PROTECTIVE IS UNDERSCORED BY ITS RATE OF LIT 525 PER KILOGRAM, WHICH IS ALMOST HALF THE 1985 IMPORT PRICE . HENCE, THAT DIFFERENCE IN TAXATION INFLUENCES THE MARKET IN THE PRODUCTS IN QUESTION BY REDUCING THE POTENTIAL CONSUMPTION OF THE IMPORTED PRODUCTS . THAT BEING SO, THE PROTECTIVE NATURE OF THE TAX SYSTEM CRITICIZED BY THE COMMISSION CLEARLY EMERGES .
14 HOWEVER, THOSE OBSERVATIONS APPLY ONLY AS REGARDS FRESH BANANAS . IN CONTRAST, AS REGARDS DRIED BANANAS AND BANANA MEAL, WHICH UNDER THE SECOND PARAGRAPH OF ARTICLE 1 OF ITALIAN LAW NO 986 ARE SUBJECTED, LIKE FRESH BANANAS, TO THE CONTESTED TAX, THE COMMISSION HAS NOT SHOWN THAT THOSE PRODUCTS ARE IN COMPETITION WITH TABLE FRUIT TYPICALLY PRODUCED IN ITALY . CONSEQUENTLY, THE COMMISSION' S APPLICATION MUST BE DISMISSED INSOFAR AS IT COVERS DRIED BANANAS AND BANANA MEAL .
15 IT FOLLOWS FROM THE FOREGOING, THAT, BY IMPOSING AND MAINTAINING IN FORCE A TAX ON THE CONSUMPTION OF FRESH BANANAS WHICH IS APPLICABLE TO BANANAS ORIGINATING IN OTHER MEMBER STATES, AND IN PARTICULAR TO BANANAS FROM THE FRENCH OVERSEAS DEPARTMENTS, THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE SECOND PARAGRAPH OF ARTICLE 95 OF THE EEC TREATY .

COSTS
16 UNDER ARTICLE 69*(2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE ITALIAN REPUBLIC HAS BEEN ESSENTIALLY UNSUCCESSFUL IN ITS SUBMISSIONS, IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS,
THE COURT
HEREBY :
( 1 ) DECLARES THAT, BY IMPOSING AND MAINTAINING IN FORCE A TAX ON FRESH BANANAS WHICH IS APPLICABLE TO BANANAS ORIGINATING IN OTHER MEMBER STATES, AND IN PARTICULAR TO BANANAS FROM THE FRENCH OVERSEAS DEPARTMENTS, THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE SECOND PARAGRAPH OF ARTICLE 95 OF THE EEC TREATY;
( 2 ) DISMISSES THE REMAINDER OF THE APPLICATION;
( 3 ) ORDERS THE ITALIAN REPUBLIC TO PAY THE COSTS .