Changes to the method of calculating excise duty on cigarettes approved; no compensation

The Lazio Regional Administrative Court has dismissed the appeal lodged by Italian Tobacco Manufacturing and Manifattura Italiana Tabacco and reaffirms the legitimacy of the provisionsregarding the method of calculating excise duties on the retail pricecigarettes. Compensation is therefore ruled outfor small Italian companies operating in the production and marketing of ‘blondes’. The administrative judges have thus brought to a close a six-year dispute between Italian Tobacco Manufacturing and Manifattura Italiana Tabacco and the Customs and Monopolies Agency. At the heart of the dispute, in which the Constitutional Court intervened twice, was themechanism for calculating theminimum tax burden (Ofm).

The case stems from an administrative appeal challenging the decision of 13 January 2020, which set out the method for calculating excise duties on cigarettes,which are considered to seriously distort competition. The rules laid down apply, in fact, to a market characterised by the presence of a few large operators, who account for a share of 90% and who produce and sell all types of cigarettes, and by the presence of smaller economic operators operating in the remaining, minority share of the market. In supplementary grounds submitted during the proceedings, the appellants also challenged the subsequent measures which reiterated the calculation mechanism that had been challenged in the first instance.

On two occasions, the Regional Administrative Court, having found the objections and issues raised and implied by the appeal to be relevant and not manifestly unfounded, referred the question of constitutional legitimacy of the legislation on ‘minimum tax burden”. And on two occasions, the Constitutional Court has declared the allegations of conflict with the Constitution to be inadmissible. At the start of the year, Italian Tobacco Manufacturing and Manifattura Italiana Tabacco lodged an application forcompensation for damages. The Regional Administrative Court, in reaffirming the constitutional legitimacy of the provisions, stated ‘the legitimacy of the Administration’s actions, which, in application of the current regulatory framework, determined the amount of the charges due without any exercise of discretion, as the present case constitutes the exercise of a binding administrative power’.

For this reason, ‘there can be no question of liability for damages… given that, first and foremost, the prerequisite of unlawful conduct is absent, since the contested act is in accordance with the law, and given that there is also no ’subjective element of fault on the part of the Administration, which merely carried out, in a timely and dutiful manner, the implementation of existing and binding legislation’.