C-25/74

Agriculture — Common organization of the markets — Cereals — Processed products — Export refund calculated in respect of the basic product — Amount — Deduction of the refund to producers granted for the basic product (Regulation No 141/64 of the Council, Article 18; Regulation No 163/64 of the Commission, Article 3 (b))

Article 18 of Regulation (EEC) No Regulations must be reduced by the 141/64 in conjunction with Article 3 (b) refund to producers granted at the date of Regulation No 163/64 must be of exportation by the exporting Member interpreted as meaning that the amount State for the basic product on which the of the refund on export of one of the refund was calculated. processed products referred to in these

In Case 25/74

Reference to the Court under Article 177 of the EEC Treaty by the Bundes­ finanzhof for a preliminary ruling in the action pending before that Court between

GÜNTER Henck

and

Advocate-General: A. Trabucchi

Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The judgment making the reference and The defendant granted the plaintiff a the written observations submitted under refund of only DM 47-40 per metric ton. Article 20 of the Statute of the Court of The plaintiff requested the grant of a Justice of the EEC may be summarized as follows: refund at the rate of DM 398 per metric ton on the ground that the refund for 100 kg of products exported should be calculated according to the rate of levy I — Facts applicable to 200 kg of maize and that the rate of levy for 100 kg of maize was fixed at the date of export at DM 199. The firm Günter Henck imported into the Federal Republic of Germany The defendant rejected this claim by the residues from the manufacture of starch plaintiff on the ground that the amount from maize, called 'maize gluten' of the refund fixed at DM 195-20 per (Cornglutenfeed) falling within heading metric ton should be reduced by the No 23.03 of the CCT, which did not refund to producers of DM 171-50 per come under the organization of the metric ton granted by the exporting markets in cereals and as result were State. The difference of DM 23-70 per exempt from levies. metric ton corresponds to a rate of refund of DM 47-40 per metric ton, The firm Henck claims to have calculated at a conversion rate of 1 000 manufactured from this product gluten kg gluten per 2 000 kg maize. flour coming under tariff heading No 11.09 of the CCT, which it exported to In Germany the refund to producers was Denmark in May 1967. granted at the time in the form of a

The action brought by the firm Henck etc. is to be set off against the export was unsuccessful and it accordingly refund for gluten under heading appealed on a point of law to the 11.09 only in those cases in which a Bundesfinanzhof. refund to producers was actually granted upon the maize product The point at issue is whether the export imported for the purpose of refund for exported gluten flour under manufacture of the gluten flour? heading No 11.09 of the Common Customs Tariff must be reduced by the — If the answer is in the affirmative: is refund to producers allowed on the this also so in cases where a refund imported maize gluten used in its to producers does not arise by reason production, although no refund to of the imported goods not being sub­ producers was in fact granted. ject to levy? Article 15 of Regulation (EEC) No The order of reference was registered at 141/64 of the Council of 21 October the Registry of the Court on 21 March 1964 (OJ 1964, p. 2666) provides that 1974. the refund on the export of certain In accordance with Article 20 of the processed cereal products, including Protocol on the Statute of the Court of maize gluten, to third countries is determined having regard to the Justice of the EEC written observations conditions on the world market and the were submitted on behalf of the firm prices of the raw materials. Article 18 of Günter Henck by Mr Roll of the the same Regulation provides that 'in Hamburg Bar, on behalf of the Einfuhr- und Vorratsstelle für Getreide und calculating the amount of the refund on exports, refunds to producers allowed in Futtermittel by Mr Stockbürger of the Frankfurt Bar and on behalf of the respect of maize, ... for the manufacture of starch... shall be taken into Commission of the European Communi­ account...'. ties by its Legal Adviser, Mr Kalbe, acting as agent. Article 3 of Regulation (EEC) No 163/64 of the Commission of 29 October 1964 Having heard the report of the (OJ 1964, p. 1741) relating to the Judge-Rapporteur and the opinion of the incidence of the grant of a refund to Advocate-General the Court decided to producers on the system ... of gluten, open the oral procedure without any provides that 'when a Member State preparatory inquiry. grants a refund to producers... the amount of the refund which may be granted on the export of the processed products ... to third countries ... shall II — Written observations be reduced by the amount of the refund submitted to the to producers granted by the exporting Court Member State on the date of exportation'. The firm Henck considers that according By order dated 19 February 1974 the to the wording and general scheme of Bundesfinanzhof decided to stay the Regulations Nos 141/64 and 163/64 it is proceedings and to refer the following permissible to take into account the questions to this Court for a preliminary refund to producers in assessing the ruling: refund on export if a refund to — Is Article 18 of Regulation (EEC) No producers was provided in every case in 141/64 in conjunction with Article 3 a general way in respect of the basic (b) of Regulation (EEC) No 163/64 product of the goods exported which to be interpreted as meaning that the may be the subject of a refund.

Article 10 of Regulation No 141/64 does coordinate in a logical manner the two not mention the basic product of tariff kinds of refunds. heading No 23.03. As a result, Article 17 The defendant considers that the form of of the same Regulation does not provide Article 18 of Regulation (EEC) No a refund to producers in respect of this 141/64 proves that the refunds to product. producers are only general factors for The defendant claims that the processed calculation to determine the amount of product under heading No 23.03 must the refunds on export for the products in be regarded as a basic product within the question. meaning of Regulations Nos 141/64 and This interpretation is confirmed by an

The question of manner as regards the basic product whether he can claim this refund is his imported for the purpose of manufacture concern alone. of the gluten. As regards the ultimate calculation of The defendant observes that the the export refund it is sufficient that the objective of the refund to producers of exporter has a general right to claim starch and quellmehl was basically to payment of the refund to producers. It put the necessary raw material at the would not have been possible to require disposal of the national starch industry the administrative authorities to check at a price which would allow it to each time, in all cases of the export of compete with substitute products processed products, whether the (Regulation (EEC) No 141/64 final exporter had already previously claimed

Community. The purpose of the provisions of Article The answer is the same in cases where 18 of Regulation (EEC) No 141/64 in the products for export capable of conjunction with Article 3 (b) of benefiting from a refund have been Regulation (EEC) No 163/64 was to produced from raw material for which

no refund to producers was provided. If the levy, (Article 1 of Regulation No on the export of gluten flour, 163/64). There could be no doubt that manufactured from a product exempt in the context of the system of levies the from levy, the maximum rates of refund levy on processed products must be had likewise been paid, the objective of deducted on a general basis. the export refund, to remove the The wording of the Regulation provides disparity in prices between the internal no basis permitting the conclusion to be and external markets, would not be drawn that the same wording must be

amount which cannot directly influence The Commission observes that, in the the costs of the production of gluten in system of Community law, levies, as well the particular case. as export refunds relating to products This flat-rate rule based on the date of processed from cereals, are not as a rule export enables a great number of amounts related each time to the controls to be done away with, which circumstances of each import or export would have been inevitable if it had been transaction but indentical amounts on a necessary to determine in each case what weight basis related to the quality of the the incidence of the amount of the product in question calculated after a refund was on the production costs and general comparison of the situation of the export costs of processed products. the external and internal markets and

. . public system of aid to derive, vis-à-vis The Commission recalls that this other producers and exporters of gluten, wording is the same as that which a competitive advantage which neither provides for the deduction of the the economic result nor the objective of amount of the refund to producers from the system of export refunds justifies.

Law

1 By order dated 19 February 1974, filed at the Court Registry on 21 March 1974, the Bundesfinanzhof referred to the Court for a preliminary ruling, under Article 177 of the EEC Treaty, questions on the interpretation of Article 18 of Regulation (EEC) No 141/64 of the Council (OJ 27. 10.1964, p. 2666) and Article 3 of Regulation (EEC) No 163/64 of the Commission (OJ 31. 10. 1964, p. 2741).

2 The questions are raised in an action relating to the amount of export refund for gluten flour from maize, a by-product of the manufacture of starch, sub heading 11.09 of the CCT. The plaintiff in the main action exported a consignment of this flour made not from maize but from 'maize gluten', a

HENCK v EINFUHR- UND VORRATSSTELLE GETREIDE

by-product of the manufacture of starch, which does not come under the common organization of the markets and which can therefore be freely imported into the Common Market at the world price. On assessing the amount of the export refund the defendant in the main action reduced it by the amount of the refund to producers granted by the Federal Republic of Germany at the date of exportation, for maize imported and used to manufacture gluten flour, under Article 18 of Regulation (EEC) No 141/64 in conjunction with Article 3 of Regulation (EEC) No 163/64.

3 The Court is asked to declare whether these provisions must be interpreted as meaning that the refund to producers in respect of the manufacture of starch from maize is to be deducted from the export refund for gluten under tariff heading 11.09 only in those cases in which a refund to producers was actually granted upon the maize product imported for the purpose of manufacture of the gluten. If this question is answered in the affirmative, it is asked whether the answer would be the same where there could be no refund to producers in respect of the raw material from which the exported goods are manufactured since such raw material is not liable to the levy.

7 In order to allow starch manufacturers to maintain competitive prices in relation to substitute products, Regulation No 141/64 authorized Member States to grant a refund to producers having the effect of making available to manufacturers of starch the necessary basic products at a price lower than that which would arise if the system of levies were applied. Article 15 provides that, as regards trade in processed products with third countries, the refund which Member States may grant shall be determined having regard to the conditions of the world market and the prices of the basic products. Nevertheless, according to Article 18, in calculating the amount of the refunds on exports for processed products, refunds to producers allowed in respect of maize for the manufacture of starch shall be taken into account. Article 3 (b) of Regulation No 163/64 provides that when a Member State grants a refund to producers, the amount of refund which may be granted on the export of the processed products shall be reduced by the amount of the refund to producers granted by the exporting Member State on the date of exportation. It follows from Regulation No 60/66/EEC of the Commission (OJ 103, p. 1854/66) that the maximum amount of the export refund for the processed product which a Member State may grant is at a flat rate, without taking into account the individual cost prices of the exporter.

8 It appears from the system thus established that after the export refund has been at the flat rate for a quantity of the basic product which is regarded as being used in the manufacture of the processed product, the amount of the refund to producers to be deducted is that granted at the date of exportation of this same basic product. Under this system the individual cost factors cannot affect the amount of the refund.

in answer to the questions referred to it by the order dated 19 February 1974, hereby rules:

Article 18 of Regulation (EEC) No 141/64 in conjunction with Article 3 (b) of Regulation No 163/64 must be interpreted as meaning that the amount of the refund on export of one of the processed products referred to in these Regulations must be reduced by the refund to producers granted at the date of exportation by the exporting Member State for the basic product on which the refund was calculated.

Lecourt Donner Sørensen Monaco Mertens de Wilmars

Pescatore Kutscher Ó Dálaigh Mackenzie Stuart

Delivered in open court in Luxembourg on 10 October 1974.

A. Van Houtte R. Lecourt