1 By judgment of 31 December 1993, received at the Court on 18 January 1994, the Cour Administrative d' Appel (Administrative Court of Appeal), Nantes (France), referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a question on the interpretation of Article 8(2) of Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector (OJ 1981 L 177, p. 4), Council Regulation (EEC) No 1358/77 of 20 June 1977 laying down general rules for offsetting storage costs for sugar and repealing Regulation (EEC) No 750/68 (OJ 1977 L 156, p. 4), and Article 12 of Commission Regulation (EEC) No 1998/78 of 18 August 1978 laying down detailed rules for the offsetting of storage costs for sugar (OJ 1978 L 231, p. 5).
2 The question was raised in proceedings between SA des Sucreries de Fontaine-le-Dun°Bolbec°Auffay ("SAFBA"), whose registered office is at Fontaine-le-Dun (Seine Maritime, France), and the French Minister for the Budget, concerning the legality of the revised assessments by which the French authorities demanded additional corporation tax from SAFBA.
3 The file shows that the legality of the revised assessments is linked to the question whether the amounts which a sugar-manufacturing undertaking has to pay as storage levy in the sugar sector are, as debts owed to a third person, deductible from the basis of assessment for corporation tax purposes in the tax year during which the sugar was produced or only in the tax year during which the sugar produced was disposed of.
4 The manufacture of sugar is a seasonal activity and the quantities produced in one year generally cannot all be disposed of in that same year, hence the need for storage. The storage levy is provided for by the Community rules on the common organization of the markets in the sugar sector. Those rules set up a system for offsetting storage costs. Under that system, the Member States reimburse at a flat-rate in the form of premiums the storage costs for certain qualities of sugar. The premiums are financed by a storage levy charged to sugar manufacturers by the Member States.
5 SAFBA manufactures sugar from beet. At the end of each tax year in the period from 1981 to 1983 it deducted from its taxable income the storage levy payable to the French body responsible for managing the system for offsetting storage costs on the basis of the quantities of sugar that it had produced during that tax year.
6 After an audit, carried out in 1984, of the accounts for the tax years ending on 30 June 1981, 1982 and 1983, the tax authorities demanded additional corporation tax from SAFBA on the ground that it had wrongly deducted the amounts payable as storage levy from income for the tax year during which the sugar had been produced.
7 According to the authorities those amounts are deductible from income for the tax year during which the sugar was disposed of, because the chargeable event is not the production but the disposal of sugar. The amounts relating to the levy do not assume the character of debts which are substantively certain as required by the case-law of the Conseil d' Etat (Council of State) until the day the sugar is disposed of.
8 SAFBA brought an action in the Tribunal Administratif (Administrative Court), Rouen, for the cancellation of the additional tax demands. In a judgment of 5 November 1991 the Tribunal Administratif dismissed that application, whereupon SAFBA appealed to the Cour Administrative d' Appel, Nantes.
9 Since it considered that an interpretation of Community law was needed to resolve the dispute, the Cour Administrative d' Appel, Nantes, decided to stay proceedings until the Court of Justice had given a preliminary ruling on the following question:
"What is the chargeable event for the levy provided for in the provisions cited above?"
10 It is apparent from the judgment referring the question to the Court that the "provisions cited above" are: (a) Article 8(2) of Regulation No 1785/81; (b) the tenth recital in the preamble to Regulation No 1358/77; and (c) Article 12 of Regulation No 1998/78.
11 It should be noted at the outset that the term "le fait générateur" (the chargeable event) for the storage levy to which the national court refers is not a term used in the Community rules concerned, but rather a term used in French tax law. It is not for the Court to give a ruling on the meaning of a term of national law. However, within the framework of its cooperation with national courts, the Court must interpret the relevant provisions of Community law in order to specify the time at which the conditions prescribed in those provisions for materialization of the obligation to pay the levy are satisfied. It is then for the national court to apply its national tax law on the basis of the Court' s interpretation.
The Community rules
12 At the material time (tax years 1981 to 1983), the following two sets of rules applied successively.
13 Until 30 June 1981 the common organization of the markets in the sugar sector was governed by the basic Council Regulation (EEC) No 3330/74 of 19 December 1974 (OJ 1974 L 359, p. 1).
14 The third subparagraph of Article 8(1) of that regulation, in the version in force at the material time (see Article 1 of Council Regulation (EEC) No 1396/78 of 20 June 1978 amending Regulation (EEC) No 3330/74 on the common organization of the markets in the sugar sector, OJ 1978 L 170, p. 1) provided:
"The Member States shall, according to the circumstances, impose a levy:
(a) on each sugar manufacturer, as appropriate:
° by unit of weight of sugar produced,
° by unit of weight of syrups referred to in the first subparagraph, produced prior to the crystallizing stage and marketed in their natural state;
[...]".
15 Regulation No 1358/77 was adopted pursuant to Regulation No 3330/74.
16 Article 6(4) of Regulation No 1358/78 provides:
"The Member State shall collect the levy from each sugar manufacturer in respect of the white and raw sugar and of the syrups ... produced and marketed within his maximum quota. Nevertheless, the levy shall not be collected when the white or raw sugar is bought by an intervention agency."
17 As regards the reasoning behind that provision, the tenth recital in the preamble states:
"... effective control of manufacturing can best be exercised when the sugar is being marketed; ... therefore, the levy should be collected from the manufacturer at the time of marketing".
18 Commission Regulation No 1998/78 was also adopted to implement the basic regulation, Council Regulation No 3330/74.
19 The first subparagraph of Article 12(1) of Regulation No 1998/78 provides:
"The levy shall be incurred in respect of products as referred to in (a) of the third subparagraph of Article 8(1) of Regulation (EEC) No 3330/74 at the moment of disposal".
20 The second subparagraph of that provision treats as "disposal" the exit of the sugar from the factory or approved warehouse of the manufacturer, transfer of property rights to the sugar without exit of the sugar from the approved warehouse, and various processing operations and denaturing of sugar.
21 From 1 July 1981 the basic regulation, Regulation No 3330/74, was replaced by basic Regulation No 1785/81.
22 The content of Article 8(2), third subparagraph (a), of Regulation No 1785/81 is identical to that of Article 8(1), third subparagraph (a), of the former basic Regulation No 3330/74, as amended by Regulation No 1396/78 (see paragraph 14 above).
23 Moreover, pursuant to Article 49(4) of the new basic Regulation No 1785/81, citations and references inter alia to Regulation No 3330/74 contained in the acts adopted in implementation of that regulation are to be understood as references
to Regulation No 1785/81. Consequently Regulations Nos 1358/77 and 1998/78 have remained in force.
The question referred for a preliminary ruling
24 In view of the foregoing, the question asked by the national court must be understood as seeking clarification as to whether Article 8(1), third subparagraph (a), of Regulation No 3330/74, as amended by Article 8(2), third subparagraph (a), of Regulation No 1785/81, and Article 6(4) of Regulation No 1358/77 should be interpreted as meaning that the prescribed conditions for materialization of the obligation to pay the storage levy are satisfied only when the sugar is disposed of.
25 SAFBA states that the chargeable event for the levy and the time at which the levy must be paid should be distinguished.
26 It would infer from Article 8(1), third subparagraph (a), of Regulation No 3330/74, as amended by Regulation No 1396/78, and from Article 8(2), third subparagraph (a), of Regulation No 1785/81 that the chargeable event for the levy is the production of the sugar.
27 The first subparagraph of Article 12(1) of Regulation No 1998/78 on the other hand concerns the point at which the levy may be collected which, for practical reasons concerning effective control, is linked to the disposal of the sugar. SAFBA considers that the tenth recital in the preamble to Regulation No 1358/77 confirms that view.
28 The French Government and the Commission believe, however, that the purpose of the above provisions of Regulations Nos 3330/74 and 1785/81 is solely to determine the taxable persons and the basis of the levy. The chargeable event for the levy is determined by Article 6(4) of Regulation No 1358/77 and is therefore the disposal of the sugar.
29 It should be noted in this connection that Article 8(1), third subparagraph (a), of Regulation No 3330/74 and Article 8(2), third subparagraph (a), of Regulation No 1785/81 made sugar manufacturers liable to pay the levy. The production of sugar is therefore a necessary condition for materialization of the obligation to pay the levy.
30 However, that was not the only condition laid down by the rules. Determination of the amount of the levy is also essential in order to circumscribe the exact scope of the obligation which cannot otherwise be regarded as having materialized.
31 A second condition was laid down by Article 6(4) of Regulation No 1358/77. That provision requires the levy to be collected by the Member States on the quantities of sugar produced "and marketed". The tenth recital in the preamble to that regulation explains that the levy should be collected at the time of marketing because it is then that effective control of manufacturing can best be exercised.
32 Accordingly it is at the time when the sugar is disposed of that all the prescribed conditions for materialization of the obligation to pay the levy are satisfied.
33 Specifically referring to that point, Article 12(1) of Regulation No 1998/78 on the one hand provides that products subject to the levy incur it at the moment of disposal (first subparagraph) and on the other hand defines what is meant by "disposal" (second subparagraph).
34 For the same reason, paragraph (I) of the annex to Commission Regulation (EEC) No 3016/78 of 20 December 1978 laying down certain rules for applying conversion rates in the sugar and isoglucose sectors (OJ 1978 L 359, p. 11), which was adopted pursuant inter alia to Council Regulation No 3330/74, sets the exchange rate to apply for the conversion of the storage levy into national currency as the representative rate applicable on the day of disposal.
35 Finally, as the Advocate General mentions in point 10 of his Opinion, in the context of the production and disposal of sugar, cash flows are a factor which also militates in favour of the interpretation given above. The production of sugar is not subject to additional expenses whereas it is the storage expenses which are reduced by the flat-rate reimbursement of the costs involved. That reimbursement is financed by the levy collected from the manufacturer when the sugar is disposed of, for instance by sale to a purchaser, but ultimately the cost is borne by the consumer by way of the general price mechanism. In the circumstances it is normal that materialization of the obligation to pay the levy should be linked to the disposal and not the mere production of sugar.
36 In the light of the foregoing, the answer to the question raised must be that Article 8(1), third subparagraph (a), of Regulation No 3330/74, as amended by Regulation No 1396/78, Article 8(2), third subparagraph (a), of Regulation (EEC) No 1785/81 and Article 6(4) of Regulation No 1358/77 must be interpreted as meaning that the prescribed conditions for materialization of the obligation to pay the storage levy are satisfied when the sugar is disposed of.
Costs
37 The costs incurred by the French Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.
On those grounds,
THE COURT (Fourth Chamber),
in answer to the questions referred to it by the Cour Administrative d' Appel, Nantes, by judgment of 31 December 1993, hereby rules:
Article 8(1), third subparagraph (a), of Council Regulation (EEC) No 3330/74 of 19 December 1974 on the common organization of the markets in the sugar sector, as amended by Council Regulation (EEC) No 1396/78 of 20 June 1978, Article 8(2), third subparagraph (a), of Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector and Article 6(4) of Council Regulation (EEC) No 1358/77 of 20 June 1977 laying down general rules for offsetting storage costs for sugar and repealing Regulation (EEC) No 750/68 must be interpreted as meaning that the prescribed conditions for materialization of the obligation to pay the storage levy are satisfied when the sugar is disposed of.
