Report for the Hearing in Joined Cases C-5/90 and C-206/90
I — Facts and procedure
A — Legal framework
1. General provisions governing export refunds applicable in the cereals sector
2. Specific provisions governing the advance payment of refunds
B — Background to the proceedings
The facts of the disputes in the main proceedings, as set out in the orders making the references, are as follows:
1. In Case C-5190
2. In Case C-206/90
It was in those circumstances that the Bundesfinanzhof, by order of 8 May 1990, which was received at the Court Registry on 6 July 1990, stayed the proceedings and referred to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty a question identical to the first question referred in Case C-5/90.
C — Procedure before the Court
1. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the Commission of the European Communities, represented by Dierk Booss, Legal Adviser to the Commission, acting as Agent, by the Hauptzollamt, represented by its Director, Herr Bollmann, by Bremer Rolandmühle, represented by H. Bohnen, Rechtsanwalt, of Schackow & Partner, by Becher, represented by P. Streck, Rechtsanwalt, of Mielke & Streck, and by Getreide-Import, represented by J. Gündisch, Rechtsanwalt, of Modest, Gündisch, Landry.
2. By an order of 24 April 1991, the Court joined the two cases for the purposes of the oral procedure and judgment.
3. By a decision of 24 April 1991, the Court assigned the two cases to the Fifth Chamber. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court also decided to open the oral procedure without any preparatory inquiry. However, it requested the Commission, Bremer Rolandmühle, Becher, Getreide-Import and the Hauptzollamt to reply to a number of questions.
II — Written observations submitted to the Court
The first question referred in Case C-5/90 and the single question referred in Case C-206/90
A —. The Commission and the Hauptzollamt argue that this question should be answered in the affirmative. In their view, a trader is under an obligation to export a product the characteristics of which correspond to the information set out in the payment declaration. If that obligation is not complied with, the system of advance payment of export refunds must be treated as having failed and the trader consequently cannot be entitled to benefit under the provisions governing that system.
1. The correspondence between the product actually exported and the information set out in the payment declaration
The Commission argues that it is essential for the proper functioning of the refund system that the product exported should correspond to the information set out in the payment declaration.
The Hauptzollamt argues that the payment declaration addressed to the customs authorities determines the subject-matter and purpose of the procedure governing the request for advance payment of the export refund. It follows that the characteristics of the product actually exported must correspond to those of the product which the trader has undertaken to export in that declaration.
2. The consequences which follow if the product actually exported does not correspond to the information set out in the payment declaration
The Commission relies on the following arguments :
B —. Bremer Rolandmühle, Becher and Getreide-Import, on the other hand, argue that in the cases referred the advance payment operation cannot be regarded as having failed. It is simply necessary to amend the amount of the refund paid in advance by applying the applicable rate to the product actually exported on the date referred to in Article 4(5) and (6) of Regulation No 565/80.
1. Types of flour having different ash contents cannot he regarded as different products
On this point, Bremer Rohndmühle submits that:
With more particular reference to Case C-206/90, Bremer Rolandmühle points out that proof that the ash content specified in the payment declaration was exceeded was not adduced in the main proceedings and that, in any event, it also had an export certificate permitting it to export flour with an ash content greater than 520 mg/100 g.
Getreide-Import takes the view, on grounds similar to those outlined by Bremer Rolandmühle, that the fact that the ash content was slightly exceeded cannot justify a finding that the product actually exported differed from that referred to in the payment declaration.
2. In the cases referred by the national court, Community law does not penalize, by loss of the benefit of the provisions relating to the advance payment of export refunds, failure on the part of the product actually exported to correspond to the information contained in the payment declaration
Bremer Rolandmühle puts forward the following textual arguments:
Becher relies on the following arguments:
The provisions of Article 10(4)(b) and (c) of that regulation are for that reason applicable and the information to be taken into consideration is the difference between the amount of the refund paid in advance and the amount of the refund due in respect of the product actually exported, as calculated on the date of the advance fixing.
Getreide-Import relies on the following arguments :
In the case where the amount of the refund proves to be smaller than the amount paid in advance, the provisions of Article 10(4)(b) and (c) of Regulation No 798/80, to which the preliminary reference relates, along with the provisions of the second paragraph of Article 6 of Regulation No 565/80 relating to the security, are applicable without its being necessary to distinguish the causes of that discrepancy.
In cases where the amount of the refund proves to be greater than the amount paid in advance, the second sentence of Article 9 of Regulation No 798/80, which provides for the payment of the difference to the exporter, becomes applicable. The interpretation to the effect that any discrepancy between the characteristics of the product actually exported and those set out in the payment declaration will justify recovery of the refund runs contrary to this latter provision.
3. The interpretation proposed by the Commission and the Hauptzollamt is neither logical nor justified
The three undertakings stress that, if the rates of refund were to be increased, the interpretation suggested by the Commission and the Hauptzollamt would allow the exporter, as the Bundesfinanzhof pointed out in the order making the reference in Case C-5/90, to obtain a higher refund than that which he would have received if he had complied with the information contained in the payment declaration. Such an interpretation would for that reason allow speculation on the part of traders.
In addition, Bremer Rohndmiihle argues that if one takes the view that exportation did not take place within the framework of an advance payment transaction, the export licence would have expired on the day of actual exportation. It must for that reason be accepted that exportation was made without being covered by an export licence, contrary to Article 12 of Regulation No 2727/75. In the logic of the argument put forward by the Hauptzollamt, no refund ought for that reason to be due to the exporter, even though the Hauptzollamt accepts that the undertakings in question are entitled to receive a refund calculated on the basis of the rate in force at the date of export.
According to Getreide-Import, the interpretation proposed by the Commission and the Hauptzollamt also cannot rely on the requirements of effective control by the customs authorities since, in the cases referred by the national court, the product actually exported is identical to that mentioned in the payment declaration both with regard to the nomenclature in the Common Customs Tariff and from the point of view of the traders and undertakings concerned.
4. The case-law of the Court of Justice does not provide justification for the interpretation proposed by the Commission and the Hauptzollamt
The second question referred in Case C-5/90
Bremer RoLndmühle and Becher argue that Regulation No 1633/80 is illegal on the ground that it fixes the rate of refund for exports to the Soviet Union at ECU 0.
That regulation, they claim, resulted exclusively from a political decision to discontinue grain deliveries to the Soviet Union by reason of that State's intervention in Afghanistan.
Neither Article 16 of Regulation No 2727/75 nor Articles 2 and 4 of Regulation No 2746/75 empower the Commission to adopt a regulation imposing a rate of refund of ECU 0 for reasons having no connection whatsoever with the law on the common organization of the markets.
Furthermore, Regulation No 1633/80, which introduced for the first time a rate of refund of ECU 0 in respect of exports to the Soviet Union, does not set out in its grounds the reasons for this substantive amendment and thereby fails to comply with the provisions of Article 190 of the EEC Treaty requiring Community measures to state the reasons on which they are based.
A decision of the Verwaltungsgericht (Administrative Court) Frankfurt, which has since become binding, had in fact already expressed doubts as to the validity of the regulation in question by reason of the absence of a statement of reasons.
The Commission, on the other hand, argues that Regulation No 1633/80 is valid.
III — Replies to the questions put by the Court
1. Questions put to the Commission and the parties in the main proceedings
The Commission and the parties to the main proceedings are requested to reply to the following questions:
Replies:
(a) The Commission's reply
It is vital, when fixing the export refunds applicable to flour, to draw a distinction on the basis of the ash content in order to take account of the factors mentioned in Article 2 of Regulation No 2746/75. The refund applicable to flour is derived from the refund applicable to wheat and flour with a high ash content is produced from a smaller quantity of wheat than flour with a low ash content. That is why, in accordance with Regulation No 1633/80, the rate of refund applicable to flour with an ash content of 1651 to 1900 mg/100 g is the lowest rate while that applicable to flour with an ash content of 0 to 520 mg/100 g is the highest rate.
The absence of a distinction in respect of the refund applicable to the two maximum categories during the period of validity of Commission Regulations No 1715/77 and No 1006/80 can be explained by the fact that it was necessary at that period, in view of the data on the export markets, to ensure that the second category, of less value, should enjoy the same rate of export refund as the first category.
The absence of a distinction in Regulation No 1221/80 of 14 May 1980 between the rates of refund for exports to the Soviet Union for the two maximum categories can be explained by the fact that that refund was fixed on a flat-rate basis at a low level. As will also be obvious from the rates of refund for exports to the Soviet Union with a'higher ash content, those rates of refund were fixed on a flat-rate basis, as an embargo measure, to rounded amounts which were between 30 and 40 ECU lower than the rates of refund applicable to other countries, a situation which rendered it practically impossible to export profitably to the Soviet Union.
(b) Reply of Bremer Rolandmiihle
Bremer Rolandmühle is unaware of the factors which led the Commission to provide in Regulation No Î633/80, over a relatively short period, for a higher export refund for wheat flour with an ash content of 0 to 520 mg/100 g than for flour with an ash content of 521 to 600 mg/100 g. This differentiated refund obviously lacked any basis since it was again discontinued with effect from 5 May 1983. The fact that the 521 to 600 mg category has now been abolished would suggest that this limit was arbitrary and did not correspond to an objective qualitative differentiation.
(c) Reply of Becher
Becher is unaware of the reason why, in the case of exports to other third countries, Regulation No 1633/80 should have provided a higher refund for wheat flour with an ash content of 0 to 520 mg/100 g than for flour with an ash content of 521 to 600 mg/100 g.
It is also unaware of the reason why this distinction does not feature in the other regulations on rates of refund cited by the Court. A differentiated refund was made for the first time with effect from 15 May 1980, and then only for other third countries. Subsequently, with effect from 1 July 1983, the refund has always been identical for the two categories of flour. Commission Regulation (EEC) No 3236/90 of 8 November 1990 (Official Journal 1990 L 310, p. 16) grouped the two categories under the single product code 11010000100. This shows that the difference in ash content cannot be a criterion capable of supporting the view of the Hauptzollamt and the Commission that the flour exported was a different product.
(d) Reply of Getreide-Import
In order to reply to the questions put by the Court, Getreide-Import can only refer to the recitals published in the preambles to the Commission regulations. It is unaware of the internal factors taken into account by the Commission or by the Management Committee for cereals involved in the procedure for drafting those regulations.
Getreide-Import cites the fourth recital in the preamble to Regulation No 1633/80 and the first recital in the preamble to Regulation No 162/67 and concludes therefrom that refunds which vary according to ash content do in fact take account of the difference in the quantity of cereals necessary for the manufacture of the product. The ash content makes it possible to use a standard method for the calculation of that quantity of cereals, in accordance with the second recital in the preamble to Regulation No 162/67.
Getreide-Import does not know why the Commission did not apply in a consistent manner throughout the regulations the method of differentiation and determination which it chose in the basic regulations. The recitals in the preambles to the regulations cited by the Court fail to indicate any reason which would justify a departure from the principle that export refunds should be fixed in accordance with ash content.
In Regulation No 1221/80, the calculation of export refunds on the basis of the quantities of cereals required for their manufacture is in principle laid down in the recitals in the preamble, in the same terms as in Regulation No 1633/80 (see fourth recital in the preamble). The fact still remains, however, that the annex setting out the amounts of refunds draws distinctions in respect of exports to the Soviet Union.
(e) Reply of the Hauptzollamt
The Hauptzollamt states that it is unable to reply to the questions put by the Court.
2. Questions put to the Hauptzoüamt
First question
The Hauptzollamt is requested to set out the reasons why, in connection with the application of Council Regulation No 565/80 on the advance payment of export refunds in respect of agricultural products, it did not apply the rate of 0 ECU laid down, in the case of exports to the Soviet Union, by Commission Regulations No 1480/80 and No 1633/80 fixing the export refunds on cereals and on wheat or rye flour, groats and meal, in order to determine the amount of prepaid refunds to which Bremer Rolandmühle Erling & Co. and Kurt A. Becher GmbH & Co. KG would have been entitled (Case C-5/90).
Reply
The following is a summary of the information supplied by the Hauptzollamt:
Second question
The Hauptzollamt is requested to set out the exact calculation, supported by the Community provisions applied, of the amount of advance refunds paid to the above undertakings and to Getreide-Import GmbH (in Cases C-5/90 and C-206/90) and of the amounts claimed from those undertakings.
Reply
With reference to the provisions of Community law applied, the Hauptzollamt sets out the calculation of amounts paid and amounts claimed, drawing a distinction between monetary compensatory amounts, minimum increases and export refunds.
The calculations supplied by the Hauptzollamt make it clear in particular that:
3. Questions put to the Commission
First question
The Commission is requested to provide the following details on Article 10(4)(b) and (c) of Regulation No 798/80, as amended by Regulation No 3445/85:
The Court would be grateful if the Commission could provide examples containing figures in its replies to the above questions.
Reply
In the Commission's opinion, Article 10(4)(b) and (c) of Regulation No 798/80 is not applicable in the present case since a product other than that mentioned in the payment declaration was manufactured. After this preliminary remark, the Commission makes the following replies to the Court's questions:
Second question
The Commission is requested to specify the manner in which checks to ensure compliance with the period within which goods must be exported (Article 11(3) of Regulation No 798/80) are normally carried out.
Reply
Checks to ensure compliance with the period within which goods must be exported are normally carried out through the attachment by the customs authorities of a special note to the export declaration form when the goods have in fact left the customs territory of the Community.
Third question
The Commission is requested to state how it reached the conclusion that the fixing of export refunds at zero rate (for exports to the Soviet Union under Regulation No 1633/80) was capable — in the absence of an embargo — of preventing flour exports from the United States of America being replaced by deliveries from the European Community.
Reply
Flour is a produce on the world market which is not exclusively manufactured in the United States of America and the European Community. At the period in question, the price on the world market (as is clear from the refund fixed in the annex to Regulation No 1633/80 for exports to other third countries) was lower than the Community price by some ECU 75/tonne. In those circumstances, exports at the Community price had no chance of being purchased on the Soviet market. The fixing of refunds at zero rate thus had the effect of an embargo.
Fourth question
The Commission is requested to state why it did not set out the factors relating to the above in the preamble to that regulation.
Reply
The periodic fixing of refunds is based essentially on constantly changing data concerning the markets of third countries and the Community (Article 2 of Regulation No 2746/75).
They are for that reason frequently amended, with the result that a zero refund rate may suddenly be fixed, without any reasons of a political nature. Traders involved have grown used to this; through the advance fixing of refunds, they are also in a position to protect themselves from the economic risk linked to refund fluctuations.
In those circumstances, it is sufficient that the Commission should provide general reasons for its regulations on refunds by reference to the different criteria to be taken into consideration under the Council's implementing regulation (in this case, Regulation No 2746/75).
The regulation on refunds thus discloses the essential objective pursued by the institution, as required by the Court in its case-law.
On the other hand, it cannot be required that the statement of reasons on which regulations are based should specify the often very numerous and complex matters of fact or of law dealt with in the regulations, provided that the latter fall within the general scheme of the body of measures of which they form part (judgment in Case 250/84 Endemia Zuccherifici Nazionali SpA and Others v Cassa Conguaglio Zucchero and Another [1986] ECR 117, at paragraph 38).
1 Language of the case: German.