JUDGMENT OF 2. 6. 1976 - CASE 125/75 EIER-KONTOR v HAUPTZOLLAMT HAMBURG-JONAS
In Case 125/75 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht Hamburg for a preliminary ruling in the action pending before that court between
THE COURT composed of: R. Lecourt, President, H. Kutscher and A. O'Keeffe, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, P. Pescatore, M. Sørensen, Lord Mackenzie Stuart and F. Capotorti, Judges, Advocate-General: G. Reischl Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts
I — Facts and procedure
II — Written observations submitted to the Court
1. The conditions giving rise to the right
1. The conditions giving rise to the right
2. Proof
Law
Costs
I —. Facts and procedure
A —. Article 4 (1) of Regulation No 1041/67/EEC of the Commission of 21 December 1967 on detailed rules for the application of export refunds on products subject to a single price system (OJ, English Special Edition 1967, p. 323) provides:
B —. 1. In 1970 the plaintiff in the main action entered into a pooling agreement for the export of German intervention butter. On the basis of this agreement it sold 3000 metric tons of this butter to the Belgian company Corman (a party to the agreement) naming, when the sale was confirmed on 12 January 1971, Morocco as the country of destination. The Corman company, by contract dated 31 December 1970, sold this butter in turn to the Belgian company Brabania (another party to the agreement) delivery to be made at Casablanca or Tangier. The Brabania company, for its part, had undertaken on 23 December 1970 te deliver the load at Danzig to a Czechoslovakian company. This was in fact done. 2. With regard to this delivery the defendant in the main action paid the basic amount of the export refund applicable on the day of export in respect of all third countries, since in its opinion it was not clearly shown that the goods bad been marketed in Morocco. The plaintiff in the main action was able to show that the load exported had arrived in Morocco and had been unloaded at Casablanca and therefore asked for payment of the difference between the refund given and the higher amount which had been fixed in advance for it on 2 September 1970 in an export licence for deliveries to Morocco, Algeria and Tunisia.
C —. By order dated 13 November 1975 the Finanzgericht Hamburg referred the following question to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty:
D —. The order of the Finanzgericht Hamburg was registered at the Court Registry on 17 December 1975.
II —. Written observations submitted to the Court
A —. 1. The plaintiff in the main action first of all supplements the statement of facts When Regulation No 804/68 was adopted the Community authorities did not foresee at all that the common organization of the market in milk would soon cause considerable surpluses. Since 1969 a butter mountain has been spoken of and this has continued to increase. In spite of measures taken by the Commission there was still no sign of these surpluses being absorbed. The plaintiff in the main action which at the time was the Bundeszentrale der deutschen Milchwirtschaft (Federal Central Office of the German Dairy Industry) and the capital of which was entirely held by two bodies governed by public law, collaborated closely with the national authorities of, the Federal Republic competent with regard to food. The latter asked it during the summer of 1970 to make greater efforts to absorb the butter surpluses. Since the clearance of the quantity which had to be dealt with exceeded its own capacity, it joined with other private butter dealers. This was how the famous butter pool was born which did in fact succeed in reducing the butter stocks by some 41.000 metric tons. The decision to export 10000 metric tons to North Africa was not taken because the refund granted in respect of this area was apparently the highest, but on an assessment of the sales possibilities. Since the market conditions altered in the meantime, only a small part of the quantity sent to Morocco remained in that country. The annual needs of Morocco, which amount to some 11000 metric tons, were therefore met in another way. The questions which have been put relate mainly to provisions of regulations which have meanwhile been amended. The greatest defect in Regulation No 1041/67 lies in the fact that the draftsmen neglected to enumerate completely the conditions giving rise to the entitlement to an export refund. They restricted themselves to speaking of proof which had to be adduced or additional proof which might be required. Further this regulation was not applied uniformly by Member States. The authorities of the Federal Republic imposed the strictest conditions and were guided by fiscal rather than economic considerations (these problems are dealt with in that country by customs officials). Relying on its experience of Belgian practice the Corman company considered on the contrary that the grant of a refund was simply subject to the condition that the goods actually arrived in Morocco. It had no reason to suspect that the payment of the refund could be made subject subsequently to proof of marketing of the goods in Morocco, its impact on the Moroccan market and its penetration of this market. Nor did the plaintiff in the main action think that this transaction would create difficulties. Further in answer to a written question the Commission stated on 18 March 1970 (OJ C 38 of 1. 4. 1970, p. 1) that Article 8 of Regulation No 1041/67/EEC: stipulates that the part of the refund in excess of the lowest refund rate is paid only if it is proved that the goods have actually arrived in the country of destination. After that the Commission can no longer follow what becomes of the goods exported. Serious doubts arise from the chronology of events as to whether the butter sold by Brabania to a Czechoslovak purchaser was the same as that sold by the plaintiff in the main action. First of all Brabania sold upon notice and obtained supplies only subsequently. The plaintiff in the main action knew nothing of these deals. It could moreover have sold directly to the Czechoslovakian company since the refund, less transport costs to the country of destination, was as regards the port of Danzig DM 11 more than the refund relating to the port of Casablanca. The fact that the Corman company and the plaintiff in the main action belong to the same pool does not alter the fact that in international trade a purchaser does not reveal to his supplier the name of the customer to whom he will sell the goods in his turn. 2. Admissibility of the questions (a) Question 1. It is quite clear that since the end of the transitional period the destination within the meaning of Article 4 of Regulation No 876/68 can only be a third country. The question should therefore be reworded as follows: Do the words the product in question has been imported into a third country used in Article 4 (1) of Regulation No 1041/67 refer to the same country, that is the destination or country of destination within the meaning of: Article 8 (1) of Regulation No 1041/67; the second sentence of Article 17 (2) of Regulation No 804/68; … (b) Questions 2, 3 and 4. The Finanzgericht is in fact asking the Court to apply Regulation No 1041/67 to the actual facts in the case. As to Question 4, goods can be destined for a country only by their owner or the person who has power to dispose of them. During the course of an export transaction goods pass successively through the hands of several persons who have the right to dispose of them. The destination of the goods can therefore change. The ultimate country of destination of goods is never certain until they are in fact consumed. There was not a detour stipulated by the export licence. The licence was binding only on the plaintiff in the main action who transported the goods to Morocco by the most direct route. Question 4 could therefore be reworded so as to ask in particular: Since Regulations Nos 876/68 and 1041/67 speak of country of destination and destination, who determines this destination in fact? Have the concepts country of destination and destination the same content and meaning in the Community provisions in question? The validity of the provisions in question. Article 4 (1) of Regulation No 1041/67 provides that in certain cases Member States may require additional proof. An enabling provision which is limited to defining by the words in certain cases the conditions which must be fulfilled for it to operate can have no effect because of ambiguity. This provision does not say clearly whether the power in the regulation in question may be exercised directly by the departments in the Member States which are competent to grant the refund or solely by the Member States themselves, that is to say according to their constitution by their government or by their legislative institutions. It does not enable it to be said whether the additional proof referred to in the first paragraph may be made obligatory in respect of the exporter only by regulations of the Commission or the Council or whether such a decision is for the Member States or until what time this proof may be required. Finally the combined effect of Articles 4 (1) and 8 (1) of Regulation No 1041/67 is that the national departments can require additional proof only if they also give notice of it to the Commission. Should it be inferred that the notice to the Commission constitutes an additional condition and that if this is not fulfilled the power conferred by Article 4 (1) cannot be exercised? Since the wording, the general structure and the objective of Regulation No 1041/67 do not allow an answer to be given, Article 4 (1) is ineffective for this reason also. 3. Answers to the questions (a) Question 1. The phrase into a third country, used in Article 4 (1), does not mean the same thing as country of destination or destination etc. This provision is aimed at preventing, first, multi-stage movements of goods (in a closed circuit), that is, exporting goods with the benefit of a high refund and then reimporting them into the Community subject to an import levy lower than the refund and, secondly, cases in which the refund is higher than the total costs of manufacture and transport costs to a place outside the three-mile limit. Article 4 never applies when in accordance with Article 6 (2) of Regulation No 876/68 and Article 8 (1) of Regulation No 1041/67 it is necessary to prove, in addition to the export, the fact that the goods have arrived in the country of destination. The proof of importation referred to in Article 4 is not complementary to proof of arrival in the country of destination (Article 6 (2) of Regulation No 876/68), but solely complementary to proof of exportation (Article 6 (1) of Regulation No 876/68). According to the last sentence of Article 4 (1) proof of importation into a third country shall be given in accordance with the provisions of Article 8 (1), that is, by evidence which establishes no more than the arrival in a third country and which, in particular, says nothing in principle on the subject of the existence of a purchaser in that country. The words the products in question has been imported into a third country in Article 4 (1) of Regulation No 1041/67 thus mean any third country and not necessarily the country of destination within the meaning of Article 8 (1) of Regulation No 1041/67. (b) Question 2. The answer suggested for the first question already implies that the goods do not have in addition to be put into free circulation in a third country. The phrase has reached its destination means no more than reached. This word expresses a pure matter of fact which cannot be equated with the legal fact of entry into free circulation. Neither the defendant in the main action nor the Commission attaches importance to entry into free circulation. The judgment which the Court gave on 27 October 1971 in Case 6/71 [1971] ECR 823 does not relate to the system established by Regulation No 1041/67 but the quite different legal position during the transitional period. The provisions which the Court had to take into account did not include a legal definition of the concept export to third countries and the Court needed in that case to define that concept in relation to that of exports to another Member State. That judgment cannot therefore be transposed on to the legal provisions to be applied in the present case. (c) Question 3. Article 6 (2) of Regulation No 876/68 cannot be understood as meaning that the product is regarded as having reached its destination only if it has entered into free circulation at the destination. The word reached means the same as arrived and simply expresses a purely material and physical fact, that is, the end of the transportation. (d) Question 4. The Finanzgericht does not raise any question with regard to the difference of opinion between the parties to the main action on the subject of the identity of the exporter, obviously because it considers it as certain that the exporter within the meaning of the law relating to refunds can only be the person who applies for the refund, that is to say the person who submits the declaration in accordance with Article 1 (1) of Regulation No 1041/67. Where refunds are fixed in advance the identity of the exporter is determined when the application for an export licence is lodged. The expression reached the destination or the country of destination in Article 6 (2) of Regulation No 876/68 and Article 8 (1) of Regulation No 1041/67 must not be understood by reference to occurrences which take place after the time when the product reaches its destination and which are not under the control of the person entitled to the refund. These concepts have the same content and meaning in Regulation No 804/68 as in Regulations Nos 876/68 and 1041/67. (e) Question 5. This question, which asks for the application of Community law to the present case, should be reworded as follows: Is the condition laid down in Article 8 (1) of Regulation No 1041/67 and Article 6 (2) of Regulation No 876/68, namely that the product must have reached the destination; still fulfilled when the person entitled to the refund knows that his purchaser or the purchaser from the latter or one of the subsequent purchasers of the goods intends to transport or does actually transport the goods after they have reached the country of destination to another third country? Until the date of the proceedings before the Finanzgericht the plaintiff in the main action did not know that after the arrival of the butter in Morocco the Brabania company had (so it appears) sold it in Czechoslovakia and sent it to Poland. It is only the route followed by the goods which can be of importance in the context of the Community provisions in question. In world trade it often happens that dealers are established in various countries of the world, including countries where the goods in a particular case never go at all. The regulations in question speak only of country of destination and not of country of the purchaser.
B —. The defendant in the main action states that since it is necessary, having regard to the distance of the Community markets from those of the countries of destination and the special import conditions obtaining in certain countries of destination (access charges, prices prevailing on the markets of those countries), to provide for the possibility of differentiating the amount of the refund according to the destination, a refund fixed on the basis of those special conditions fulfils its objective only when the product has actually reached the market of that country. It is not sufficient that the product has been transported merely physically to the country of destination whence, without being integrated into the economy of such country, it is forwarded to another third country where other market conditions prevail. It does not matter whether after reaching the market in question the product stays in the country of destination (cf. reply of the Commission in OJ C 38 of 1970, p. 2). It is the same both with regard to the interpretation of the concept reached the destination within the meaning of Article 6 (2) of Regulation No 876/68 and the interpretation of the concept imported into a third country within the meaning of Article 4 (1) of Regulation No 1041/67.
C —. The Commission makes the following observations:
1. The conditions giving rise to the right
2. Proof
1. By order dated 13 November 1975 received at the Court on 17 December 1975 the Finanzgericht Hamburg has referred to the Court under Article 177 of the EEC Treaty certain questions for a preliminary ruling on the interpretation of Article 4 of Regulation No 1041/67/EEC of the Commission of 21 December 1967 laying down detailed rules for export refunds on products subject to a single price system (OJ English Special Edition 1967, p. 323).
2. The first question asks whether Article 4 (1) of Regulation No 1041/67/EEC in the version in force in 1971, whereby in certain cases, inter alia by reason of the nature of the exported products or of export markets, Member States may require proof not only that the product has left the geographical territory of the Community, but also that the product in question has been imported into a third country, must be interpreted to the effect that the destinations of the products as mentioned in Article 4 of Regulation No 876/68 in respect of which an export refund has been varied may also be regarded as a third country.
3. Since these questions mainly raise the problem of the objective of the system of refunds, it is fitting to give a general answer to them.
4. Article 17 (1) of Regulation No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (OJ English Special Edition 1968 (I), p. 176) provides that: …to enable the products listed in Article 1 to be exported … on the basis of the prices for those products in international trade, the difference between those prices in the Community may be covered by an export refund.
5. The reason why the refund varies according to the destination of the products is, according to the fourth recital to Regulation No 876/68, that markets in the countries of destination are at varying distances from Community markets and special conditions apply to imports in certain countries of destination.
6. If it sufficed for the goods simply to be unloaded to qualify for payment of the refund at a higher rate, the raison d'être of the system of varying the refund would be disregarded and abuse would be made possible to the detriment of Community interests.
7. The plaintiff in the main action has raised doubts as to the validity and interpretation of Article 4 of Regulation No 1041/67.
8. The costs incurred by the Commission of the European Communities which has submitted its observations to the Court are not recoverable and as the proceedings are, so far as the parties to the main action are concerned, 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 In answer to the questions referred to it by the Finanzgericht Hamburg by order of that court dated 13 November 1975 hereby rules:
(1) Article 4 (1) of Regulation No 1041/67 is a provision of general application and applies in all cases where there is a refund, even if the refund has been varied according to the destination;
(2) The said article must be interpreted in conformity with Article 6 of Regulation No 876/68 and, where the refund is varied, means that the goods must have been given customs clearance and put into free circulation at the destination;
(3) Only objective criteria can be taken into account in answering the question whether goods have reached the market at their destination so that it is not necessary to ascertain whether the exporter who made the application knew at the date in question that the goods would ultimately be transported to another country.