JUDGMENT OF 7. 7. 1976 – CASE 7/76 IRCA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

In Case 7/76 Reference to the Court under Article 177 of the EEC Treaty by the Ufficio di Conciliazione, Rome, 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, A. J. Mackenzie Stuart, F. Capotorti, Judges, Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and procedure

II — Summary of the written observations lodged with the Court

As to the first question

As to the first question

As to the second question

As to the third question

As to the fourth question

IIl — Oral procedure

Law

Costs

I —. Facts and procedure

A —. Regulation No 805/68 of the Council of 27 June 1968 (OJ, English Special Edition 1968, p. 187) established the common organization of the market in beef and veal.

B —. The IRCA company declares that on 22 March 1973 it imported 563 sacks of frozen meat and offals of bovine animals having a total weight of 19800 kg and having a value of Lit. 15635670.

C —. The reference was entered at the Court Registry on 26 January 1976.

II —. Summary of the written observations lodged with the Court

(a). Regulation No 905/73, because it contains a provision with retroactive effect thus infringing an acquired personal right.

(b). Regulation No 648/73, because it infringes Article 155 of the EEC Treaty, the rules of the Council, and equality as between traders.

(a). After describing the background of regulations in the present case, the undertaking IRCA argues that Regulation No 905/73, which itself says that it shall enter into force on the day of its publication in the Official Journal, namely on 7 April 1973, obviously cannot validly provide that the adjustments set out therein shall apply with effect from 26 February 1973.

(b). The latter provision infringes Article 155 of the Treaty, and the rules laid down by the Council, especially Articles 4 (a) and (6) of Regulation No 974/71, and the principle of non-discrimination.

(a). The compensatory amounts for trade between Member States must be identical to those applicable to trade with third countries, for otherwise deflections of trade would be provoked.

(b). The import charge with which the compensatory amount has to be compared consists of a percentage applied to the value of the goods: in order to convert this percentage into a monetary figure, the value of the goods has to be assessed. This operation constitutes a serious obstacle to intra-Community trade for which the customs offices of the Community are no longer equipped, intra-Community customs duties having been abolished. In the case of exports to third countries complications also arise, because the customs offices do not normally undertake an assessment of the value of the goods.

IIl —. Oral procedure

1. By order of 22 January 1976, which reached the Court Registry on 26 January 1976, the Giudice Conciliatore has referred to the Court of Justice for a preliminary ruling four questions on the interpretation and validity of Regulation No 648/73 of the Commission of 1 March 1973 laying down detailed rules for the application of monetary compensatory amounts (OJ L 64, of 9.3.1973, p. 1) and Regulation No 905/73 of the Commission of 23 March 1973 fixing the amount by which the monetary compensatory amounts are to be adjusted (OJ L 92, of 7.4.1973, p. 1).

2. The questions have been referred to the Court in relation to an action between IRCA, the plaintiff in the main action, and the Italian revenue authorities. IRCA has claimed that the revenue authorities should be ordered to repay a sum wrongly assessed for payment by reason of the fact that certain compensatory amounts with which IRCA ought to have been credited had been wrongly calculated.

3. The undertaking argued that when, on 22 March 1973, it imported 563 parcels of frozen meat and offals of bovine animals, the customs authorities applied the prescribed customs duty, namely Lit. 1563570, credited the undertaking with Lit. 1506780 by way of monetary compensatory amounts and, after subtracting this credit from the import charge, which in this case corresponded to the customs duty, claimed payment of the difference, namely Lit. 56790.

4. The questions referred to the Court seek enlightenment first on whether the Community regulation on which the revenue authorities based their calculations are valid, and secondly on whether the retroactive effect which the administration allegedly gave to those regulations is compatible with the principles and rules of the Community legal order.

5. It is appropriate to examine first the questions relating to the validity of Regulations Nos 648/73 and 905/73 (Questions 2, 3 and 4).

6. Before going in detail into the problems raised by these questions, mention should be made of the fact that Regulation No 974/71 of the Council was amended by Regulation No 509/73 which not only added Article 4a to it but changed and extended the whole system because of world-wide currency disturbances which affected the rate of exchange of several Member States from 13 February 1973 onwards.

7. This modification rendered it necessary for the Commission to replace its old implementing Regulation No 1013/71 (OJ L 110, p. 8) by Regulation No 648/73.

8. Next, Regulation No 649/73 of the Commission of 1 March 1973 fixing the monetary compensatory amounts (OJ L 64, p. 7) in the form adopted and published, provides in Article 1: Without prejudice to the provisions of Article 4a (2) of Regulation (EEC) No 974/71 monetary compensatory amounts shall be arrived at as follows:

9. Article 6 of Regulation No 648/73 provides:

10. Pursuant to this provision, the Commission adopted and published its Regulation No 905/73.

11. The answer to the question whether Regulations Nos 648/73 and 905/73 of the Commission were adopted in accordance with Articles 4a and 6 of Regulation No 974/71 of the Council is that those regulations were properly adopted, particularly when account is taken of the exceptionally wide terms of Article 6 of Regulation No 974/71, which requires the Commission to adopt detailed rules for application and provides that those detailed rules shall cover in particular the fixing of the compensatory amounts.

12. The third question asks whether the validity of Regulations Nos 905/73 and 648/73 is not affected by the fact that their implementation puts Italian importers in a different situation in comparsion with importers belonging to countries with a strong currency, and … they always involve a divergence unfavourable to Italian importers between the value calculated as a lump sum by the Community for the monetary compensatory amounts and the value determined by the Italian customs authorities upon importation

13. The reason why the importers and exporters of the different Member States are put in different situations is to be found not in the application of the system of compensatory amounts but in the circumstances which led to its introduction, namely the movements of national currencies beyond the limits of fluctuation authorized by international rules.

14. Therefore the validity of the regulations in question cannot be affected by the facts set out in the third question.

15. The fourth question asks whether the said regulations are … valid although they introduce a difference in the application of monetary measures between trade in the meat of bovine animals and that in other products coming under the agricultural regulations.

16. It is not correct that Regulation No 905/73 only covers beef and veal, as Annexes I and II thereto comprise a Part A relating to cereals and a Part B relating to beef and veal. It follows that that regulation is not an exceptional measure adopted for beef and veal alone, but constitutes a general measure implementing Article 4a of Regulation No 974/71 for the agricultural products which that article was intended to cover.

17. However, the plaintiff in the main action alleges that the way in which Article 4a is applied by Regulation No 905/73 is unacceptable as regards beef and veal because, contrary to the provisions governing the other agricultural products, the Common Customs Tariff does not set a fixed rate calculated by weight on the importation of beef and veal, but an ad valorem duty of 10 %.

18. Nevertheless both Regulation No 649/73 and Regulation No 905/73 respectively set for beef and veal a basic amount and an adjusting amount under Article 4a of Regulation No 974/71. These amounts do not reflect the value of specific goods.

19. The whole system of monetary compenstory amounts is founded on the principle that these amounts are not based on the prices in fact paid for the goods, but on basic amounts fixed by the Commission from week to week.

20. Moreover this principle is the one most in line with the purpose of the system, which is not to indemnify the parties concerned against the consequences of disturbances on the world currency markets, but to render the functioning of the common organizations of agricultural markets possible notwithstanding the fluctuations of the currencies of the Member States.

21. Furthermore an exception such as the one suggested by the plaintiff would meet with grave difficulties, since as regards intra-Community trade goods are valued according to criteria which are not uniform.

22. It follows from the foregoing that the questions referred to the Court of Justice by the national court have disclosed no factor of such a kind as to affect the validity of Regulations Nos 648/73 and 905/73.

23. The first question asks whether Regulation No 905/73 published in the Official Journal of 7 April 1973 could be applied to an importation which took place on the preceding 22 March and, if so, whether there exists under the Community legal system a principle or a rule allowing the Community authorities to adopt retroactive legislation.

24. The purpose and organization of the system of monetary compensatory amounts make it inevitable that the amounts applicable for a certain period shall only be fixed after the event, since in the nature of things the decisive factors can in general only be determined towards the end of that period.

25. It should be noted that the system of compensatory amounts was not introduced but only amended by Regulations Nos 509/73 and 648/73.

26. It was therefore necessary, in order that there be no discontinuity in the application of a system which had become essential to the functioning of the common agricultural policy, to adopt rules and to fix amounts for the period subsequent to that date.

27. However, the amounts laid down by Regulation No 649/73 had to be adjusted in accordance with Article 4a of Regulation No 974/71, as Article 1 of the first of those regulations expressly provides.

28. Since, in the circumstances set out above, it is appropriate to recognize that Regulation No 649/73 validly applied with effect from 26 February 1973 although it was only published on 9 March 1973, it follows that the same must be true of Regulation No 905/73 which constitutes the necessary complement of Regulation No 649/73, and which was foreseeable from the day when Regulation No 509/73 was published.

29. It follows from all the foregoing that it is right to state that with regard to monetary compensatory amounts the fact that the factors necessary for their calculation are only determined after the period during which the said amounts have become applicable is frequently inherent in the system itself, particularly at a time of sudden and unforeseeable changes in market conditions, and cannot, therefore, be considered, on such grounds, as giving the rules a retroactive effect.

30. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

On those grounds, THE COURT in answer to the questions referred to it by the Ufficio di Conciliazione, Rome, by order of 22 January 1976, hereby rules:

1 With regard to monetary compensatory amounts, the fact that the factors necessary for their calculation are only determined after the period during which the said amounts have become applicable is inherent in the system itself, and cannot be considered, on such grounds, as giving the rules a retroactive effect.

2 Consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of Regulations Nos 648/73 and 905/73.