Judgment of the Court (Fourth Chamber) 3 October 1991

In Case C-364/89, REFERENCE to the Court under Article 177 of the EEC Treaty from the Finanzgericht, Düsseldorf, for a preliminary ruling in the proceedings pending before that court between

THE COURT (Fourth Chamber), composed of: M. Diez de Velasco, President of the Chamber, C. N. Kakouris and P. J. G. Kapteyn, Judges, Advocate General: M. Darmon, Registrar: H. A. Rühi, Principal Administrator,

after considering the written observations submitted on behalf of An Bord Bainne, by Hilmar Nehm, of the Düsseldorf Bar, the Commission of the European Communities, by Dierk Booss, Legal Adviser, acting as Agent, assisted by Hans-Jürgen Rabe, of the Hamburg and Brussels Bars,

having regard to the Report for the Hearing,

after hearing the oral observations of An Bord Bainne, the Hauptzollamt Gronau, represented by Horst Biedinger, Regierungsdirektor (Director) of the Oberfinanzdirektion (Principal Revenue Office), Cologne, acting as Agent, and the Commission, at the hearing on 7 March 1991,

after hearing the Opinion of the Advocate General at the sitting on 16 May 1991,

gives the following

Judgment

First question

Second question

Costs

1. By order of 15 November 1989, which was received at the Court on 4 December 1989, the Finanzgericht (Finance Court), Düsseldorf, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Articles 8 and 9 of Commission Regulation (EEC) No 926/80 of 15 April 1980 on exemption from the application of monetary compensatory amounts in certain cases (Official Journal 1980 L 99, p. 15), as amended by Commission Regulation (EEC) No 2899/81 of 7 October 1981 (Official Journal 1981 L 287, p. 3).

2. Those questions were raised in the course of proceedings between the Irish cooperative society, An Bord Bainne, and the Hauptzollamt (Principal Customs Office) Gronau concerning exemption from the application of increased monetary compensatory amounts which the undertaking in question was required to pay following the revaluation of the German mark.

3. The Commission adopted Regulation No 926/80, the second of its kind, in order to alleviate the disadvantages which might be incurred by economic operators as a result of amendments to the monetary compensatory amounts between the conclusion and the performance of certain contracts.

4. According to the third recital in the preamble to that regulation, ... the purpose of the rules is to exempt, on a discretionary basis, operations carried out under existing contracts from the application of monetary compensatory amounts ... such an equity clause gives rise to a degree of flexibility enabling each case to be considered on its merits ... .

5. Article 8 of the regulation in question, as amended by Regulation No 2899/81, is in the following terms:

6. Article 9 is worded as follows:

7. Regulation No 926/80 was repealed by Commission Regulation (EEC) No 1084/84 of 18 April 1984 (Official Journal 1984 L 106, p. 26), and was not superseded by another regulation.

8. It is apparent from the documents before the Court that on 11 February 1983 An Bord Bainne concluded several contracts for the delivery, between April and September 1983, of skimmed milk powder to an undertaking in Germany. In accordance with those contracts, the risk of the monetary compensatory amounts was borne by An Bord Bainne and the price of the goods in question was to be paid in German marks.

9. On the date when the contracts for those goods were concluded, that is to say on 11 February 1983, An Bord Bainne concluded a forward currency operation for the purchase of United States dollars in two tranches, one of DM 3.65 million and the other of DM 7 million, that is for a total amount of German marks equivalent to the entire proceeds expected from the performance of the contracts for goods.

10. Furthermore, by means of what are known as swap transactions, An Bord Bainne sold the US dollars thus acquired against German marks and on 15 February 1983 concluded other forward currency operations whereby the German marks purchased under the swap arrangements were definitively converted into US dollars.

11. An Bord Bainne stated before the Court that it was customary to execute forward currency operations through the intermediary of a swap transaction, comprising three parallel exchange transactions, and that, moreover, the lapse of time from 11 to 15 February 1983 resulted from the fact that the banks state the value date two working days after the transaction has been concluded and from the fact that 11 February 1983 was a Friday and there were no exchange transactions on the Saturday or Sunday.

12. Following the revaluation of the German mark on 21 March 1983, that is to say after the conclusion of the contracts in issue but before the delivery of the relevant goods, the Commission, by Regulation (EEC) No 689/83 of 23 March 1983 (Official Journal 1983 L 80, p. 1), was obliged to increase the German monetary compensatory amounts.

13. An Bord Bainne's requests for total or partial exemption from the application of the increased monetary compensatory amounts were refused by the Hauptzollamt Gronau, and its appeal to the Oberfinanzdirektion (Principal Revenue Office) Münster was dismissed.

14. The Finanzgericht Düsseldorf, before which the matter was brought, was confronted with the problem of determining the additional expense within the meaning of Articles 8 and 9 cited above. More particularly, it questioned the manner in which the advantage resulting from the exchange operations, which, pursuant to Article 8(3), was to be deducted from the additional expense, was to be taken into account and calculated. Expressing doubts as to the interpretation of the Community legislation in question, it stayed its proceedings and referred to the Court the following questions for a preliminary ruling:

15. Reference is made to the Report for the Hearing for a fuller account of the facts of the main proceedings, the legislative framework and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

16. By its first question, the national court seeks to ascertain whether Article 8(3) of Regulation No 926/80, as amended, must be interpreted as meaning that the advantage referred to therein may be calculated on the basis of a non-Community currency.

17. An Bord Bainne and the Commission are at one in contending that the advantage referred to in the provision in question must be calculated on the basis of the currency actually used by the person concerned in a forward currency operation, even if it is a non-Community currency.

18. That approach must be accepted.

19. The wording of the provision in question includes no restriction on the currency which may be used in a forward currency operation or any indication leading to the conclusion that only forward currency operations concluded in a specified currency can be accepted for the purpose of calculating the possible advantage.

20. Moreover, the spirit and purpose of the provision under consideration are to permit determination, for the purpose of exemption, of the additional expense resulting from the new monetary compensatory amount, after deduction of the advantage obtained following a forward currency operation having an economic connection with the operation relating to the goods, in such a way that the economic operator concerned is not accorded favourable treatment.

21. Such an advantage may result from a forward currency operation actually carried out by the economic operator concerned in the currency of his choice.

22. To preclude from the calculation of the advantage operations carried out in a non-Community currency would be to accord favourable treatment to certain economic operators in so far as they may receive exemption from the additional expense and, at the same time, benefit from the advantage obtained following a forward currency operation concluded in such a currency. Such a result is outside the purpose of the provision in question.

23. Accordingly, the reply to the first question must be that Article 8(3) of Regulation No 926/80 must be interpreted as meaning that the advantage referred to therein must be calculated on the basis of the currency actually used by the person concerned in connection with a forward currency operation, even if that currency is not a Community currency.

24. In the light of that reply, there is no need to reply to the question submitted in the alternative by the national court.

25. In the first part of its second question the national court essentially asks whether the second subparagraph of Article 9(2) of Regulation No 926/80, apart from the cases referred to at (a), requires the economic connection to be verified in the case of every forward currency operation, including those concluded on the same day as the contract for goods.

26. An Bord Bainne contends in that respect that the final subparagraph of Article 8(3), according to which, where both operations are concluded on the same day, ... no exchange advantage may be taken into account in determining the additional expense, lays down a rule of evidence and establishes an irrebuttable presumption. In such a case, therefore, the economic connection between the two contracts should be regarded as having been proved.

27. The Commission takes the view, on the other hand, that the contradiction between the second subparagraph of Article 9(2) and the last subparagraph of Article 8(3) is only apparent, since the two provisions have different objectives: the first lays down the general requirement of an economic connection in the case of forward currency operations, whilst the second concerns the calculation of the advantage resulting from a forward currency operation where it is proven that that operation has an economic connection with a contract for goods. Thus, in the Commission's view, the economic connection of a forward currency operation with the contract for goods must always be proved before the question arises of the calculation of the possible advantage which may result therefrom.

28. In that connection it must be pointed out that the final subparagraph of Article 8(3) was specifically added to Regulation No 926/80 by Regulation No 2899/81, for the reason stated in the recital in the preamble to that regulation, according to which, where the forward currency operation and the contract for goods were concluded on the same day, one may reasonably consider that the forward currency rate is reflected in the price of the goods and, accordingly, is the rate employed for concluding the contract, which implies that there is no difference between the conversion rates to be compared and that there is no exchange advantage to be taken into consideration when determining the additional expense. Consequently, in the view of the Community legislature, where both operations are concluded on the same day, there is definitely an economic connection, but account will have been taken of all the monetary circumstances at the time when the contract for the goods was concluded.

29. Where both operations are concluded on the same day, the wording of the provision in question thus precludes the taking into account of any advantage with sufficient clarity and precision to leave no doubt as to its interpretation, and does not warrant any verification of the economic connection under Article 9.

30. Accordingly, the reply to the second question must be that the second subparagraph of Article 9(2) of Regulation No 926/80 must be interpreted as meaning that, apart from the cases mentioned under (a) of the provision in question, as a general rule, evidence must be produced of the economic connection with the contract for goods for every forward currency operation, except where, as provided for in Article 8(3), both operations were concluded on the same day.

31. In the light of that reply, there is no need to reply to the questions submitted in the alternative by the national court.

32. The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Fourth Chamber), in answer to the questions referred to it by the Finanzgericht Düsseldorf by order of 15 November 1989, hereby rules:

1 Article 8(3) of Commission Regulation (EEC) No 926/80 of 15 April 1980 on exemption from the application of monetary compensatory amounts in certain cases must be interpreted as meaning that the advantage referred to therein must be calculated on the basis of the currency actually used by the person concerned in connection with a forward currency operation, even if that currency is not a Community currency.

2 The second subparagraph of Article 9(2) of Regulation No 926/80 must be interpreted as meaning that, apart from the cases mentioned under (a) in the provision in question, as a general rule, evidence must be produced of the economic connection with the contract for goods in the case of every forward currency operation, except where, as provided for in Article 8(3), both operations were concluded on the same day.

1 Language of the case: German.