JUDGMENT OF 21. 2. 1974 — CASE 162/73 BIRRA DREHER v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

In Case 162/73 Reference to the Court under Article 177 of the EEC Treaty by the Pretore di Roma (Stipendiary Magistrate of Rome) for a preliminary ruling in the application pending before him for an order of the court against the Amministrazione delle Finanze dello Stato (State Administration of Finance) by

THE COURT composed of: R. Lecourt, President, M. Sørensen, President of Chamber, R. Monaco, P. Pescatore (Rapporteur), H. Kutscher, C. Ó Dálaigh and Lord Mackenzie Stuart, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

II — Observations submitted to the Court

A — As to the reference to the Court

B — As to the questions put by the national court

Grounds of judgment

As to the jurisdiction of the Court

As to the substance of the case

Costs

I —. Facts and procedure

1. Whether, in granting special production refunds on broken rice used in the manufacture of beer, Regulation No 367/67 of EEC of the Council was intended to place broken rice, meant for use in this way, on the same level of competitiveness and cheapness as other cereals (particulary maize) for which similar refunds have been provided when they are used for the same purpose (manufacture of beer).

2. Whether, in view of the intention referred to above, the provisions of Regulation No 367/67 ECC (especially the recital) and of Regulation No 2085/68 of the Commission should be-interpreted as meaning that, to encourage the use of broken rice produced in the Community in the manufacture of beer, it must be made possible for brewers to buy broken rice at a low price (for example 8·30 units of account per 100 kilogrammes), and in any case lower than the price the product could command if it had been put to a different use.

3. If the answer to question 2 is in the affirmative, whether a brewer who has paid for the broken rice at the normal market price, which was fixed without taking any account whatever of the refund, is entitled to receive the refund, in view of the fact that the broken rice producer has already received the full price based on market quotations.

4. If the answer to question 3 is in the affirmative, and bearing in mind that the Community rules governing the case in hand are directly applicable, whether Member States can, by internal legislation, make the exercise of the brewer's right to be paid the refunds provided under Regulation No 367/67 of the Council and No 2085/68 of the Commission dependent on written consent being given by the broken rice producers.

II —. Observations submitted to the Court

A —. As to the reference to the Court

B —. As to the questions put by the national court

1. The aim for which the refund was instituted appears from the following considerations.

2. It would be normal that; with the refund being allocated, to the user, he should be required, in-order to receive it, to establish the reality of his right to credit. In this respect the question arises of the legality of Article 4, of the decree of, the Italian Minister of Finance of 10 June 1970 which requires the user of the broken rice to produce the express consent, in writing, of the producer.

1. Article 3 (2) of Regulation No 2085/68 clearly specifies the producer of broken rice as the recipient of the refund; this provision is in conformity with the whole of the system of refunds and its spirit.

2. The Italian Government correctly applied Community rules by providing that application for the refund must be made by the producer of the broken rice, or else by the user on condition that he provides the express written consent of the producer; in such a case account will have been taken, with a view to simplification, of an assignment of the claim which has taken place between the producer and the user. But in the absence of such consent it must be assumed that the user has paid a normal price and has no right to the refund.

3. The first question put by the Rome Pretore thus requires an affirmative answer, it being understood, first, that the refund is intended to protect the interests of producers of broken rice and, secondly, that this protection must be viewed in relation not only to products similarly benefiting from a refund but also to other substitute products.

1. It is incontestable that the production refund for broken rice used in the brewing industry is granted to the producer of the broken rice: he is to be considered as the person entitled to the refund.

2. Neither the wording nor the objective of the Regulations regarding the production refund for broken rice requires that the benefit of this refund should accrue to the brewery using it.

3. This conclusion is in fact equally valid in so far as and to the extent to which the functioning of the market has been able to take full effect and producer and brewer have been able to negotiate the sale price by taking the grant of the refund into account; when the parties to the contract have agreed, in negotiating the sale price, that the refund granted to the producer is to be transferred in whole or in part to the brewery using the broken rice, Community rules do not oppose the implementation of this agreement.

1. By Order of 29 August 1973, lodged at the Court Registry on 4 September 1973, the Pretore of Rome, called upon to give judgment in the matter of an application for an order of the court against the Administration of Finance, put a number of questions relating to the interpretation of certain provisions of Regulation No 367/67 of the Council of 25 July 1967 fixing production refunds on maize groats and meal and broken rice used in the brewing industry (OJ No 174, p. 36), and of Regulation No 2085/68 of the Commission of 20 December 1968 on certain detailed rules for granting the production refund on broken rice (OJ L 307, p. 11).

2. The Government of the Italian Republic, in the course of the oral procedure, expressed doubts as to the jurisdiction of the Court to give a ruling in pursuance of Article 177 of the EEC Treaty on a preliminary question raised in the course of an application for an order of the court brought before the Pretore by an individual against the Administration.

3. According to Article 177 of the Treaty, the procedure regarding preliminary rulings is open to any national court or tribunal. It is sufficient to determine that the Pretore, in hearing the application for the grant of an order, is exercising the functions of a court or tribunal within the meaning of Article 177 — as has moreover previously been decided — and that an interpretation of Community law has been considered by that court as essential for it to arrive at a decision, without its being necessary for the Court of Justice to consider the stage of the proceedings at which the question was put. Article 177 does not make the reference to the Court subject to whether the proceedings at the conclusion of which the national court has drawn up the reference for a preliminary ruling were or were not defended.

4. The questions put are directed substantially to enquiring whether the right to the refund laid down by Regulations Nos 367/67 and 2085/68 for broken rice used by the brewing industry is vested exclusively in the producer or whether the benefit of the refund may in certain circumstances be claimed directly by the brewery using the rice.

5. In pursuance of Article 9 of Regulation No 359/67 of the Council of 25 July 1967 on the common organization of the market in rice (OJ No 174, p. 1), a production refund shall be granted for broken rice which has been used either by the starch industry or by the brewing industry.

6. By virtue of Article 1 of Regulation No 367/67, Member States shall grant a production refund both for maize groats and meal and for broken rice used in the brewing industry. Article 2 of the same Regulation requires them in addition to take all necessary measures to ensure that the refunds are limited to the quantities of maize groats and meal and of broken rice actually used by that industry.

7. In its turn Regulation No 2085/68 of the Commission lays down certain detailed rules for granting a refund on the importation or production of broken rice. In particular Article 3 (2) of this Regulation specifies that in order to receive payment of the refund the producer of broken rice shall submit to the competent authorities an application accompanied by certain evidence intended to establish that the rice has been used for the purposes referred to in the Regulation.

8. The wording of these different Regulations specifies beyond any possible doubt that they apply to production refunds and that the right to them is conferred on producers and not users. These provisions are explained by the economic objective of the rules in question which aim not at conferring an advantage on the brewing industry but at avoiding a situation whereby the determination of the price level of certain basic products — namely maize, common wheat and rice — might lead to the closing to these products of the outlets which the starch industry and the brewing industry represent for them.

9. This intention is expressed in the preamble to Regulation No 367/67, according to which the refund in question should be fixed at such a level as to achieve a balance between the costs of supplying the brewing industry with maize starch on the one hand and with maize groats and meal and broken rice on the other.

10. This conclusion is not invalidated by the fact that Regulation No 2085/68 of the Commission grants the refund not only to the producer but also to the importer of broken rice. This implementing provision, necessitated by the fact that, for imported broken rice, the producer is outside the sphere of application of Community law, does not result in any modification in the nature of the refund, as a production refund, laid down by the basic Regulation No 359/67 and confirmed by the implementing Regulation No 367/67 of the Council.

11. Finally, a national implementing provision which recognizes a right to the refund on the part of the brewer using the broken rice only in the event of such right's having been expressly assigned to him by the producer cannot be considered as incompatible with the system set up by the Community's Regulations. In fact, since the brewer using the broken rice cannot avail himself of a right directly conferred by the said Regulations, such a right can only be vested in him by virtue of an express assignment by the producer.

12. Consequently it is appropriate to reply to the questions put, in so far as they raise a legal problem of interpretation, that the brewer who has paid for broken rice at the market price not taking account of the refund cannot assert a direct right to benefit from the latter, and that a system permitting the transfer to the brewer of the right to the refund by virtue of the formal agreement of the producer, with the consequence that in the absence of such an agreement the brewer cannot assert any direct right, is not incompatible with those Regulations.

13. The costs incurred by the Government of the Italian Republic and the Commission of the European Communities, which have submitted their observations to the Court, are not rocoverable, and as the proceedings are a step in the action pending before the Rome Pretore, it is for the latter to decide as to costs.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the plaintiff in the main action, the Government of the Italian Republic and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 177; Having regard to Regulation No 367/67 of the Council of 25 July 1967 fixing production refunds on maize groats and meal and broken rice used in the brewing industry; Having regard to Regulation No 2085/68 of the Commission of 20 December 1968 on certain detailed rules for granting the production refund on broken rice; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities; THE COURT in answer to the questions referred to it by the Pretore of Rome by order of 29 August 1973, hereby rules:

1 A brewer who has paid at the market price for broken rice intended for the brewing of beer cannot assert a direct right to the grant of the refund referred to in Article 9 of Regulation No 359/67 of 25 July 1967 and Regulation No 2085/68 of 20 December 1968;

2 Member States may, by domestic implementing measures, permit the transfer to breweries of the right to the refund by virtue of the formal consent of the producer.