JUDGMENT OF 20. 3. 1980 — CASE 118/79 KNAUF WESTDEUTSCHE GIPSWERKE v HAUPTZOLLAMT HAMBURG-JONAS

In Case 118/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court] for a preliminary ruling in the proceedings pending before the court between

THE COURT (Second Chamber) composed of: A. Touffait, President of Chamber, P. Pescatore and O. Due, Judges, Advocate General: G. Reischl Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

I — Facts and procedure

II — Written observations lodged with the Court by the Commission of the European Communities

III Oral procedure

Decision

Costs

I —. Facts and procedure

1. Gebrüder Knauf Westdeutsche Gipswerke, the plaintiff in the main action, declared to the customs authorities in September and October 1974 special maize starch coming under tariff heading 11.08 A I of the Common Customs Tariff for export to Austria under outward processing arrangements which had been authorized by the German customs authorities. It re-imported into the Community the compensating product manufactured from that starch and intended for the building sector.

2. The Hauptzollamt Hamburg-Jonas, the defendant in the main action, charged a total sum of DM 7103,40 as export levies on the basis in particular of Regulation (EEC) No 2443/74 of the Commission of 27 September 1974 and Regulation (EEC) No 2527/74 of the Commission of 4 October 1974 fixing the export levies on starch products (Official Journal 1974, L 262, p. 5 and L 271, p. 20) and of Regulation (EEC) No 1981/74 of the Commission of 25 July 1974 laying down detailed rules for the application pursuant to Article 7 (2) of Regulation (EEC) No 1132/74 of an export levy on starches (Official Journal 1974 L 207, p. 9).

3. The objections lodged by Gebrüder Knauf Westdeutsche Gipswerke against the charging of those levies were unsuccessful. The application which they brought before the Finanzgericht [Finance Court] Hamburg was also dismissed.

4. The order making the reference shows that the undertaking claimed before the Bundesfinanzhof inter alia that the Community regulations on export levies contain only outline provisions concerning the rates of the duties and the time when they are to be imposed and that furthermore national law on such levies is to be applied. The undertaking considers that the German provisions in question, in particular Article 52 of the Zollgesetz [Customs Law] and also Article 18 of the Gesetz zur Durchführung der Gemeinsamen Marktorganisationen [Law implementing the common organizations of the markets] provide for exemption from the levy in the case of the exportation of processed products under outward processing arrangements.

5. The Bundesfinanzhof observes that:

6. The order making the reference was entered on the Court Register on 26 July 1979.

II —. Written observations lodged with the Court by the Commission of the European Communities

III. Oral procedure

1. By order of 19 June 1979, which was received at the Court Registry on 26 July 1979, the Bundesfinanzhof submitted to the Court of Justice pursuant to Article 177 of the EEC Treaty the following question for a preliminary ruling:

2. The question was raised in the context of an action involving, on the one hand, a German undertaking which exported special maize starch to Austria under outward processing arrangements which were authorized by the German customs authorities and re-imported the compensating product manufactured from such starch and, on the other, the Hauptzollamt Hamburg-Jonas which, when the goods were exported, charged the levies fixed in the regulations of the Commission adopted on the basis of the provision quoted in the question.

3. The objections of the undertaking and its application lodged with the Finanzgericht Hamburg were unsuccessful. It then appealed to the Bundesfinanzhof claiming in particular that the spirit and objectives of Regulation No 1132/74 precluded the charging of an export levy since the products were not sold on the external markets but were re-imported into the Community after being processed into a different product.

4. According to the order making the reference, whilst the Bundesfinanzhof admits that the wording of the provisions in question tends to favour the view of the customs authorities, it has doubts as to whether the objectives in view in charging an export levy also justify charging that levy where the goods are exported under outward processing arrangements.

5. As the Bundesfinanzhof has stated, it is not sufficient to find that on a purely literal interpretation the word export covers cases where goods leave the geographical territory of the Community under outward processing arrangements. It must in addition be considered whether such cases are also covered by the intention of the Community legislature which is, according to the recitals of the preamble to the regulation, to avoid disturbances on the markets in nonmember countries.

6. The essential objective of Regulation No 1132/74 is in fact to grant production refunds inter alia to maize used for starch manufacture to ensure that its prices are competitive with those of substitute products. Since the prices of maize on the world market usually remain below the prices of substitute products in the Community the exportation of maize starch for which such refunds have been granted does not disturb the markets in nonmember countries except in the case of an appreciable and persistent increase in prices on the said markets. In the latter case Article 7 (2) of Regulation No 1132/74 enables the Commission to introduce an export levy to compensate for the difference between prices on the world market and supply prices within the Community with a view to reducing the advantages granted to Community manufacturers to an appropriate level.

7. Since there is no system of Community control ensuring the re-importation of the products exported under outward processing arrangements or subsequent charging of levies, the very presence on the markets in nonmember countries of Community goods which are intended to be treated under outward processing arrangements but which are capable of being sold on those markets at a price less than the market price may cause disturbances.

8. Furthermore, the use by the processing industry in nonmember countries of cheap products from the Community may adversely affect the processing of domestic products in such nonmember countries, which would also constitute a disturbance on the market of such countries.

9. It follows from those considerations that the objectives in view in imposing the export levy thus justify such imposition even if the goods are exported under outward processing arrangements.

10. Moreover, it seems improbable that the Community legislature intended to confer upon the processing industry of nonmember countries, which is in competition with the Community industry, the benefit of Community refunds intended to maintain for the Community industry supply prices which are competitive with those of substitute products by reducing prices at the same time to a level below those on the world market.

11. Since the outcome of a literal interpretation is thus confirmed by consideration of the objectives and of the scheme of the provision in question it is necessary to reply to the question submitted that the concept of export within the meaning of Article 7 (2) of Regulation (EEC) No 1132/74 of the Council must be interpreted as meaning that any levy which may be introduced in pursuance of that provision must also be imposed on the exportation of the products in question when they are exported under outward processing arrangements and later re-imported as compensating products.

12. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable; as these proceedings are, in so far as the parties to the main action are concerned, in the nature of 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 (Second Chamber) in answer to the question referred to it by the Bundesfinanzhof by order of 19 June 1979, hereby rules: