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Report s of C ases JUDGMENT OF THE COURT (Seventh Chamber) 11 July 2019 * (Failure of a Member State to fulfil obligations — Excise duties on alcohol and alcoholic beverages — Article 110 TFEU — Directive 92/83/EEC — Directive 92/84/EEC — Regulation (EC) No 110/2008 — Application of a lower rate of duty to the manufacture of national products ‘tsipouro’ and ‘tsikoudia’) In Case C-91/18, ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 8 February 2018, European Commission, represented by A. Kyratsou and F. Tomat, acting as Agents, applicant, v Hellenic Republic, represented by M. Tassopoulou and D. Tsagkaraki, acting as Agents, defendant, THE COURT (Seventh Chamber), composed of T. von Danwitz, President of the Chamber, C. Vajda and A. Kumin (Rapporteur), Judges, Advocate General: E. Sharpston, Registrar: A. Calot Escobar, having regard to the written procedure, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment 1 By its application, the European Commission requests the Court to declare that – by adopting and maintaining in force legislation which applies a rate of excise duty 50% below the standard national rate to tsipouro and tsikoudia manufactured by ‘systematic distilleries’, whereas alcoholic beverages imported from other Member States are subject to the standard rate of excise duty, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in * Language of the case: Greek. EN ECLI:EU:C:2019:600 1 JUDGMENT OF 11. 7. 2019 — CASE C-91/18 COMMISSION V GREECE (TSIPOURO) conjunction with Article 23(2) of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages (OJ 1992 L 316, p. 21), and under Article 110 TFEU, and – by adopting and maintaining in force legislation which applies, on conditions laid down by that legislation, a much reduced rate of excise duty to tsipouro and tsikoudia manufactured by small ‘occasional distilleries’, whereas alcoholic beverages imported from other Member States are subject to the standard rate of excise duty, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duty on alcohol and alcoholic beverages (OJ 1992 L 316, p. 29), and under Article 110 TFEU. Legal context EU law 2 The 16th, 17th and 20th recitals of Directive 92/83 read as follows: ‘Whereas it is possible to permit Member States to apply reduced rates or exemptions for certain products of a regional and traditional nature; Whereas, in the cases where Member States are permitted to apply reduced rates, such reduced rates should not cause distortion of competition within the internal market; … Whereas, however, it is possible to permit Member States an option to apply exemptions tied to end-uses within their territory’. 3 Article 19 of Directive 92/83 provides: ‘1. Member States shall apply an excise duty to ethyl alcohol in accordance with this Directive. 2. Member States shall fix their rates in accordance with Directive 92/84/EEC.’ 4 Article 20 of that directive provides: ‘For the purposes of this Directive the term “ethyl alcohol” covers: – all products with an actual alcoholic strength by volume exceeding 1.2% volume which fall within CN codes 2207 and 2208, even when those products form part of a product which falls within another chapter of the CN, …’ 5 Article 21 of that directive provides: ‘The excise duty on ethyl alcohol shall be fixed per hectolitre of pure alcohol at 20 °C, and shall be calculated by reference to the number of hectolitres of pure alcohol. Subject to the provisions of Article 22, Member States shall charge the same rate of duty on all products chargeable with the duty on ethyl alcohol.’ 2 ECLI:EU:C:2019:600 JUDGMENT OF 11. 7. 2019 — CASE C-91/18 COMMISSION V GREECE (TSIPOURO) 6 Article 22 of that directive provides: ‘1. Member States may apply reduced rates of excise duty to ethyl alcohol produced by small distilleries within the following limits: – the reduced rates, which may fall below the minimum rate, shall not be applied to undertakings producing more than 10 hectolitres of pure alcohol per year. However, Member States which applied reduced rates on 1 January 1992 to undertakings producing between 10 hectolitres and 20 hectolitres of pure alcohol per year may continue to do so, – the reduced rates shall not be set more than 50% below the standard national rate of excise duty. 2. For the purposes of the reduced rates, the term “small distillery” shall mean a distillery which is legally and economically independent of any other distillery and which does not operate under licence. … 4. Member States may lay down provisions whereby the alcohol produced by small producers shall be released for free circulation as soon as it is obtained (provided the producers have not themselves carried out any intra-Community transactions) without being subjected to the tax warehousing arrangements, and be taxed definitively on a flat-rate basis. …’ 7 Article 23 of that directive provides: ‘The following Member States may apply a reduced rate, which may fall below the minimum rate but not be set more than 50% below the standard national rate of duty on ethyl alcohol, to the following products: … 2. the Hellenic Republic, in respect of those aniseed flavoured spirit drinks defined in [Council] Regulation (EEC) No 1576/89 [of 29 May 1989 laying down general rules on the definition, description and presentation of spirit drinks (OJ 1989 L 160, p. 1)] which are colourless and have a sugar content of 50 grams or less per litre, and in which at least 20% of the alcoholic strength of the final product is composed of alcohol flavoured by distillation in traditional discontinuous copper stills with a capacity of 1 000 litres or less.’ 8 Regulation No 1576/89 was repealed and replaced by Regulation (EC) No 110/2008 of the European Parliament and of the Council of 15 January 2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks and repealing Council Regulation (EEC) No 1576/89 (OJ 2008 L 39, p. 16). 9 Article 4 of Regulation No 110/2008 provides: ‘Spirit drinks shall be classified into categories according to the definitions laid down in Annex II.’ 10 In accordance with Annex II to that regulation: ‘… 6. Grape marc spirit or grape marc ECLI:EU:C:2019:600 3 JUDGMENT OF 11. 7. 2019 — CASE C-91/18 COMMISSION V GREECE (TSIPOURO) (a) Grape marc spirit or grape marc is a spirit drink which meets the following conditions: (i) it is produced exclusively from grape marc fermented and distilled either directly by water vapour or after water has been added; (ii) a quantity of lees may be added to the grape marc that does not exceed 25 kg of lees per 100 kg of grape marc used; (iii) the quantity of alcohol derived from the lees shall not exceed 35% of the total quantity of alcohol in the finished product; (iv) the distillation shall be carried out in the presence of the marc itself at less than 86% vol.; (v) redistillation at the same alcoholic strength is authorised; (vi) it contains a quantity of volatile substances equal to or exceeding 140 grams per hectolitre of 100% vol. alcohol and has a maximum methanol content of 1 000 grams per hectolitre of 100% vol. alcohol. (b) The minimum alcoholic strength by volume of grape marc spirit or grape marc shall be 37.5%. (c) No addition of alcohol as defined in Annex I(5), diluted or not, shall take place. (d) Grape marc spirit or grape marc shall not be flavoured. This shall not exclude traditional production methods. (e) Grape marc spirit or grape marc may only contain added caramel as a means to adapt colour. … 28. Anis (a) Anis is an aniseed-flavoured spirit drink whose characteristic flavour is derived exclusively from anise (Pimpinella anisum L.) and/or star anise (Illicium verum Hook f.) and/or fennel (Foeniculum vulgare Mill.). (b) The minimum alcoholic strength by volume of anis shall be 35%. (c) Only natural flavouring substances and preparations as defined in Article 1(2)(b)(i) and Article 1(2)(c) of Directive 88/388/EEC may be used in the preparation of anis. 29. Distilled anis (a) Distilled anis is anis which contains alcohol distilled in the presence of the seeds referred to in category 28(a), and in the case of geographical indications mastic and other aromatic seeds, plants or fruits, provided such alcohol constitutes at least 20% of the alcoholic strength of the distilled anis. (b) The minimum alcoholic strength by volume of distilled anis shall be 35%. (c) Only natural flavouring substances and preparations as defined in Article 1(2)(b)(i) and Article 1(2)(c) of Directive 88/388/EEC may be used in the preparation of distilled anis. …’ 4 ECLI:EU:C:2019:600 JUDGMENT OF 11. 7. 2019 — CASE C-91/18 COMMISSION V GREECE (TSIPOURO) 11 Under Article 15(2) of that regulation, geographical indications of spirit drinks are registered in Annex III to that regulation. Points 6 and 29 of that annex read as follows: ‘ Geographical indication Country of origin (the precise Product category geographical origin is described in the technical file) … 6. Grape marc spirit Marc de Champagne/Eau-de-vie France de marc de Champagne … … Aguardente Bagaceira Bairrada Portugal … … Orujo de Galicia Spain Grappa Italy … … Τσικουδιά/Tsikoudia Greece Τσικουδιά Κρήτης/Tsikoudia of Greece Crete Τσίπουρο/Tsipouro Greece Τσίπουρο Μακεδονίας/Tsipouro Greece of Macedonia Τσίπουρο Θεσσαλίας/Tsipouro of Greece Thessaly Τσίπουρο Τυρνάβου/Tsipouro of Greece Tyrnavos Eau-de-vie de marc de marque Luxembourg nationale luxembourgeoise Ζιβανία/Τζιβανία/Ζιβάνα/ Cyprus Zivania Törkölypálinka Hungary … 29.

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