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Judgment of the Court (First Chamber) of 2 May 1990.

Staat der Nederlanden v P. Bakker Hillegom BV.

Reference for a preliminary ruling: Hoge Raad - Netherlands.

Free movement of goods - Charges having equivalent effect - Fees charged for plant health inspections on exportation.

Case C-111/89.

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Judgment of 2 May 1990, Netherlands State / Bakker Hillegom (C-111/89, ECR 1990 p. I-1735) ECLI:EU:C:1990:177

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Staat der Nederlanden v P. Bakker Hillegom BV.

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Keywords

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Free movement of goods - Customs duties - Charges having equivalent effect - Fees charged in respect of plant health inspections on exportation provided for in an international convention - Permissibility dependent on the system and the manner in which the fees are charged

( EEC Treaty, Arts 12 and 16 )

Summary

Fees charged for inspections of plants to be exported, carried out under an international convention intended to encourage the free movement of plants, are charges having an effect equivalent to customs duties when their amount is calculated according to the weight of the plants or their invoice value, even where the total amount charged in respect of those inspections does not exceed the total amount of the costs directly and indirectly connected therewith . The contrary is true only where the amount of each fee is related to the actual cost of the specific inspection in respect of which it is charged .

When field inspections are carried out on all plants produced, fees charged only in respect of exported products, and not in respect of those intended for the home market, constitute charges having equivalent effect even if those inspections are carried out to meet the requirements of international conventions affecting only exported products . The contrary would be true only if it were established that the products intended for the home market derived no benefit from the inspections .

Parties

In Case C-111/89

REFERENCE to the Court under Article 177 of the EEC Treaty by the Hoge Raad der Nederlanden ( Supreme Court of the Netherlands ) for a preliminary ruling in the proceedings pending before that court between

Staat der Nederlanden

and

P . Bakker Hillegom BV,

on the interpretation of Articles 12, 16 and 36 of the EEC Treaty,

THE COURT ( First Chamber )

composed of : Sir Gordon Slynn, President of Chamber, R . Joliet and G . C . Rodríguez Iglesias, Judges,

Advocate General : F . G . Jacobs

Registrar : J . A . Pompe, Deputy Registrar

after considering the observations submitted on behalf of

P . Bakker Hillegom BV, the defendant in the main proceedings, by J . van der Plas, of the Hague Bar;

the Government of the Netherlands, by B . R . Bot, Secretary-General in the Ministry of Foreign Affairs, acting as Agent; and

the Commission of the European Communities, by René Barents, a member of its Legal Department, acting as Agent,

having regard to the Report for the Hearing, and after hearing the oral observations of the defendant, the Government of the Netherlands, represented by J . W . de Zwaan, acting as Agent, and the Commission of the European Communities at the hearing on 11 January 1990,

after hearing the Opinion of the Advocate General delivered at the sitting on 6 March 1990,

gives the following

Judgment

Grounds

1 By judgment dated 31 March 1989, which was received at the Court on 6 May 1989, the Hoge Raad der Nederlanden referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Articles 12, 16 and 36 of the EEC Treaty .

2 Those questions arose in proceedings between the Netherlands Plant Health Authority and P . Bakker Hillegom BV ( hereinafter referred to as "Bakker ") concerning fees charged to cover the cost of inspection of plants intended for export .

3 A decision of 23 June 1967, pursuant to Article 6a of the Plantenziektenwet ( Netherlands Law of 5 April 1951 on plant diseases ), lays down the tariff of the Plant Health Authority . In accordance with that decision, the fees charged in respect of plant health inspections are to be calculated on the basis of either the weight of the plants ( or parts of plants ) presented for exportation or the net value shown on the invoice .

4 Under the national legislation in force at the material time, the cost of field inspections of plants, which by their very nature are carried out on all products whether subsequently exported or not, was invoiced exclusively to exporters; they were charged 75% of the total cost on the ground that only 75% of production was intended for export . The remaining 25% was not charged either to exporters or to dealers who sold their products on the home market, but was borne by the State .

5 Between 1974 and 1977 the Plant Health Authority carried out numerous inspections of plants intended for exportation on Bakker' s land, and charged fees totalling HFL 317 400.09 for those inspections . Bakker refused to pay, and the State initiated recovery proceedings in the civil courts . The Rechtbank ( District Court ) allowed the State' s claim, with the exception of the cost of the field inspections . The State appealed against that judgment to the Gerechtshof ( Regional Court of Appeal ), The Hague, and Bakker lodged a cross appeal . The Gerechtshof upheld the Rechtbank' s judgment and both parties appealed to the Hoge Raad der Nederlanden .

6 The Hoge Raad der Nederlanden decided to stay the proceedings and seek a preliminary ruling from the Court on the following questions :

"( 1 ) Under Community law, in particular Articles 12, 16 and 36 of the Treaty establishing the European Economic Community, may fees charged for inspections on consignments of plants ( or parts thereof ) intended for export, calculated in accordance with Article 1(1 ) of the Plant Health Authority Tariff, that is to say according to the criteria of weight or invoice value, be considered not to be charges having an effect equivalent to customs duties where the total revenue from export inspections does not exceed the total amount of all the costs directly and indirectly connected with those inspections,

or may such fees be considered not to be charges having an effect equivalent to customs duties only where the amount of each fee is related to the cost of the actual inspection in respect of which it is charged?

( 2 ) If it is true that

( a ) field inspections are carried out because certain diseases, from which plants intended for export must be certified as being free, can be diagnosed only while the plants are still in the ground, and

( b ) when field inspections are carried out the market for which the plants still in the ground are intended has not yet been determined, with the result that field inspections for export are inevitably also carried out on plants intended for the Netherlands market,

does the fact that 75% of the cost of those field inspections is attributed to exports ( on the ground that 75% of the bulbs affected by field inspections are exported ) and that the remaining 25% of that cost is not charged to dealers who sell the bulbs on the Netherlands market constitute a ground for taking the view that the charging of the costs of those field inspections to exporters is incompatible with Community law?"

7 Reference is made to the Report for the Hearing for a fuller account of the legal background, the facts of the case, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

8 It must be pointed out at the outset that Article 36 of the Treaty, to which the national court' s judgment refers, cannot be applied in a situation such as that at issue in the main proceedings . The Court has consistently held that Article 36 must be interpreted strictly and thus cannot be understood as authorizing measures of a different nature from those referred to in Articles 30 to 34 ( see, inter alia, the judgment of 25 January 1977 in Case 46/76 Bauhuis v Netherlands (( 1977 )) ECR 5, paragraph 12 ).

The first question

9 As the Court has held on many occasions, the justification for the prohibition of customs duties and any charges having an equivalent effect lies in the fact that any pecuniary charge, however small, imposed on goods by reason of the fact that they cross a frontier constitutes an obstacle to the movement of goods which is aggravated by the resulting administrative formalities . It follows that any pecuniary charge, whatever its designation and mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier and is not a customs duty in the strict sense constitutes a charge having an effect equivalent to a customs duty within the meaning of Articles 9, 12, 13 and 16 of the Treaty .

10 However, the Court has held that such a charge escapes that classification if it relates to a general system of internal dues applied systematically and in accordance with the same criteria to domestic products and imported products alike ( judgment of 31 May 1979 in Case 132/78 Denkavit v France (( 1979 )) ECR 1923 ), if it constitutes payment for a service in fact rendered to the economic operator of a sum in proportion to the service ( judgment of 9 November 1983 in Case 158/82 Commission v Denmark (( 1983 )) ECR 3573 ), or again, subject to certain conditions, if it attaches to inspections carried out to fulfil obligations imposed by Community law ( judgment of 25 January 1977 in Case 46/76 Bauhuis v Netherlands, cited above ).

11 It appears from the national court' s judgment that the fees in issue in the main proceedings relate to plant health inspections on exportation provided for by an international convention intended to encourage the free importation of plants into the countries of destination by establishing a system of inspections in the exporting State, recognized and organized on a reciprocal basis . In its judgment of 12 July 1977 in Case 89/76 Commission v Netherlands (( 1977 )) ECR 1355, the Court held that such fees were compatible with the rules of the Treaty "provided that their amount does not exceed the actual cost of the operations in respect of which they are charged" ( paragraph 16 of the judgment ). The national court' s first question seeks to clarify the scope of that condition .

12 It must be observed that that condition cannot be considered to have been satisfied unless there is a direct link between the amount of the fee and the actual inspection in respect of which the fee is charged . Without such a link, it would be impossible to ensure that the amount of the fee did not exceed the actual cost of the operation in respect of which it was charged .

13 As the Commission rightly submitted, such a link is present when the amount of the fees is calculated on the basis of the duration of the inspection, the number of persons required, the cost of materials, overheads or other similar factors, which does not preclude a fixed-rate assessment of inspection costs, such as, for example, a fixed hourly rate .

14 However, there is no direct link between the actual inspection and the amount of the fee when the calculation of that amount is based on the weight or invoice value of the products exported . Under a system of that sort, the fees must therefore be regarded as charges having equivalent effect, and incompatible with Articles 12 and 16 of the Treaty .

15 That conclusion is not inconsistent with the Court' s judgment of 31 January 1984 in Case 1/83 IFG v Freistadt Bayern (( 1984 )) ECR 349, to which the Netherlands Government refers . It is true that the Court, in that judgment, acknowl edged that a Member State cannot be prevented from passing on to the importer not only the costs of specific inspections relating to the goods in question but also the burden of the administrative expenses involved in organizing the health controls ( paragraph 17 of the judgment ). However, that case concerned fees charged in respect of health inspections of goods imported from non-member countries . As the Court pointed out in its judgment, health inspections of goods imported from non-member countries are carried out in a different factual and legal context from inspections of goods originating in the Community ( paragraph 10 ).

16 The answer to the first question must therefore be that Articles 12 and 16 of the Treaty are to be interpreted as meaning that fees charged for inspections of plants to be exported, carried out under an international convention intended to encourage the free movement of plants, are charges having an effect equivalent to customs duties when their amount is calculated according to the weight of the plants or their invoice value, even where the total amount charged in respect of those inspections does not exceed the total amount of the costs directly and indirectly connected therewith . The contrary is true only where the amount of each fee is related to the actual cost of the specific inspection in respect of which it is charged .

The second question

17 The second question seeks only to determine whether Community law prohibits the charging of fees for field inspections of plants in respect of exported products alone and not products intended for the home market .

18 The Netherlands Government contends that field inspections of plants are carried out only because they are prescribed for products exported under international conventions . Since dealers whose products are sold on the home market derive no benefit from such inspections, it is fair that the costs should not be passed on to them .

19 That argument could be accepted only if it were established that only exporters benefited from the inspections in question . If, however, products intended for the home market derive any benefit, even slight, from those inspections, the fact that fees are charged only on exported products means that they constitute charges having an effect equivalent to customs duties on exports, which are prohibited by Articles 12 and 16 of the Treaty . It is for the national court to make the relevant findings of fact in that regard .

20 The answer to the second question must therefore be that Articles 12 and 16 of the Treaty are to be interpreted as meaning that fees for field inspections of plants charged only in respect of exported products, and not in respect of those intended for the home market, constitute charges having an effect equivalent to customs duties on exports, even if those inspections are carried out to meet the requirements of international conventions affecting only exported products . The contrary would be true only if it were established that the products intended for the home market derived no benefit from the inspections .

Decision on costs

Costs

21 The costs incurred by the Government of the Netherlands and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court .

Operative part

On those grounds,

THE COURT ( First Chamber ),

in answer to the questions referred to it by the Hoge Raad der Nederlanden, by judgment of 31 March 1989, hereby rules :

( 1 ) Articles 12 and 16 of the Treaty are to be interpreted as meaning that fees charged for inspections of plants to be exported, carried out under an international convention intended to encourage the free movement of plants, are charges having an effect equivalent to customs duties when their amount is calculated according to the weight of the plants or their invoice value, even where the total amount charged in respect of those inspections does not exceed the total amount of the costs directly and indirectly connected therewith . The contrary is true only where the amount of each fee is related to the actual cost of the specific inspection in respect of which it is charged .

( 2 ) Articles 12 and 16 of the Treaty are to be interpreted as meaning that fees for field inspections of plants charged only in respect of exported products, and not in respect of those intended for the home market, constitute charges having an effect equivalent to customs duties on exports, even if those inspections are carried out to meet the requirements of international conventions affecting only exported products . The contrary would be true only if it were established that the products intended for the home market derived no benefit from the inspections .

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