C-106/75

2. Agriculture — Common organization of the market — Products subject to a single price system — Exportation — Certificate — Product indicated — Product exported — Difference — Export refund — Granting — Rate — Fixing — Absence — Benefit — Right — Absence (Regulation No 120/67 of the Council, Article 16; Regulation No 1041/67 of the Council, Article 1 and Article 3)

1. Flaked barley under tariff heading 1041/67 may be understood as 11.02 E I b 1 is manufactured from conferring a right to the grant of an grains subjected to hulling which export refund even if the product removes part of their husk and what exported differs from that for which distinguishes it from 'rolled grains' of the export certificate was issued. barley under subheading 11.02 E I a 1 When at the relevant date no rate of is thus not what is removed in rolling. refund is fixed for the product which 2. Article 16 of Regulation No 120/67 is actually exported there is no right and Articles 1 and 3 of Regulation No to a refund.

In Case 106/75

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

1 — Language of the Case: French.

JUDGMENT OF 8. 4. 1976 — CASE 106/75

Advocate-General: G. Reischl

Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The order making the reference and the 1. whether tariff subheading 11.02 E I a written observations submitted under 1 of heading 11.02 of the Common Article 20 of the Protocol on the Statute Customs Tariff ‘rolled barley grains' of the Court of Justice of the EEC may differs from tariff subheading 11.02 E be summarized as follows: I b 1 'flaked barley' in that, as opposed to rolled barley grains, flaked barley must be manufactured from I — Facts and procedure hulled barley grains (shelled or husked) or whether the difference By an order of 29 August 1975 the between those two tariff subheadings Finanzgericht Hamburg requests the merely lies in the fact that flaked Court in accordance with Article 177 of barley is more intensively rolled the EEC Treaty to give a preliminary (crushed or ground), without prior ruling on the questions: hulling of the grains of barley,

(rolled barley grains under tariff subheading 11.02 E I a 1), there exists On the basis of the rate for rolled barley a right to the granting of an export grains under subheading 11.02 E I a 1 refund in respect of the basic product the defendant in the main action on 19 which may qualify for a refund (barley June 1974 remitted to the plaintiff in the under tariff heading 10.03). main action a sum of 13 021-07 DM in settlement of the compensatory amounts During the month of July 1972 the whilst persisting in its refusal to grant the plaintiff in the main action exported four latter an export refund since Regulation consignments of goods coming under No 1383/72 of the Commission of 30 heading 11.02 E I b 1 bb 'flaked barley June 1972 (JO No L 149, p. 30) which not listed under subheading 11.02 E I b was in force at the date of the 1 aa of the Customs Tariff and thus exportation, did not prescribe a refund having an ash content exceeding 1 % on for rolled barley and the plaintiff in the the dry product and a raw cellulose main action was not entitled to the content exceeding 0-9 % on the dry refunds in respect of flaked barley and product. barley since it had not exported those products. It then claimed from the defendant in the main action payment of an export The court making the reference refund and of compensatory amounts. considers that the reply to Question 1 is supplied neither by the wording of tariff It emerged from examination of the heading 11.02, 'cereal grains … (for samples which were taken from the example rolled … or flaked) nor by that

of tariff subheading 11.02 E, 'rolled only drawn up after the date of the grains; flaked grains'. The words added in exportation in dispute. brackets, 'for example, … flaked ...' [cereal grains] merely explain that flaked With regard to the second question, if barley also constitutes rolled cereal grains the reply to the first question is that since it has been further crushed and barley flakes must be manufactured from rolled. With regard to numbered hulled grains, then the plaintiff in the subparagraph 6, item 2, of the second main action exported a product for paragraph of the Explanatory Notes to which it had not obtained an export the Brussels Nomenclature on tariff certificate. In that case it could only heading 11.02 it is not stated clearly obtain an export refund for another whether flaked barley must be product if it considered that the manufactured from husked grain (that is acquisition of this right is not subject to to say grain from which the pericarp has the issue of a certificate and that the been largely removed). When the said certificate and the granting of a refund notes state that the latter must have are on different levels and quite retained a part of their pericarp they do unconnected. The court making the not indicate how much of the pericarp reference has already rejected this view remains or how the pericarp removed but, taking account of Working was separated. Document No VI/358/74 — B of the Commission in which the opposite point By 'pericarp' is meant the skin beneath of view is propounded, it considers it the husk. As the explanatory notes do appropriate to submit the question to the not explicitly prescribe a process for Court of Justice. With regard to the third removing the husks from grains of barley question, if the point of view maintained it cannot be excluded that part of the in the Commission's document is upheld husk is removed as a result not only of (that if the conditions laid down in the hulling of the barley grains prior to Articles 1 and 3 of Regulation No mechanical crushing or rolling but also 1041/67 are fulfilled export refunds must following scouring, cleaning and in principle be granted even if a valid crushing or rolling. Nor do those notes certificate is not submitted), the plaintiff provide grounds for holding that flaked in the main action is in principle barley must have lost at least 75 % of its entitled to an export refund in respect of bracts, which would only be possible if flaked barley coming under tariff the grains of barley had been hulled subheading 11.02 E I a 1. With regard to before crushing. Such a requirement the alternative claim, to the extent to follows neither from the wording of the which it is compatible with the articles relevant tariff subheadings nor from the cited in the second question, the Brussels Explanatory Notes. The Commission's point of view is also valid maximum content in raw cellulose is not if the product in respect of which the fixed with regard to subheading 11.02 E I refund is claimed is the basic product b 1 bb so that even a very high bract from which the product actually exported content does not preclude classification was obtained, by a simple physical under this subheading provided that at treatment.

mentions first of all cereal groats and point of view. The plaintiff in the main cereal meal classified under subheading action adduces as evidence the report of 11.02 A, then cereal grains distinguished an engineer operating in the milling according to how they have been worked: industry and in the construction of mills, hulled grains, classified under according to which flakes can be subheading 11.02 B, pearled grains, manufactured without hulling. The term classified under subheading 11.02 C, 'flakes' can only be employed with regard kibbled grains under subheading 11.02 D to products which have been cooked and and rolled grains (including flaked grains) steamheated and thereafter rolled and

under subheading 11.02 E. The tariff dried. Dry products cannot be classified thus draws a distinction between hulled as flakes.

and is then pressure-rolled. The relevant sheets comprising an entity having a product constitutes flaked barley when more or less regular form and a smooth the barley has been hulled, subjected to surface.

grains also undergo steam (thermal) parts of the pericarp by hulling and treatment until the grain, which in its following prolonged hydrothermal treatment, have been pressure-rolled so natural state is hard and brittle, becomes soft and supple to the point where the 1 — The last phrase in parentheses does not occur in the pressure-rolling no longer grinds it into original English version of the Brussels Nomenclature irregular pieces but processes it into (Translator's note).

MERKUR-AUSSENHANDEL v HAUPTZOLLAMT HAMBURG-JONAS

otherwise with regard to the granting of rolled barley grains would a disparity export refunds. between the certificate and the goods exported jeopardize the entitlement of The defendant in the main action such goods to the ordinary refund which was not fixed in advance? No considers that a right to the grant of an export refund arises in a case such as the Community provision renders the present one — independently of the acquisition of a right to a refund (not submission of a certificate — when, with fixed in advance) subject to the regard to the product which has been submission of an export certificate. Furthermore this is not one of the exported after completion of the customs export formalities prescribed by 'customs export formalities' which it is Regulation No 1041/67, a regulation of essential to complete in order to acquire the Commission provides — where the right to the refund. In addition it does not constitute proof of the appropriate by the method of advance fixing — for an export refund of a exportation and merely enables the Commission to make the most reliable specific amount. In so far as in the present case the plaintiff exported 'rolled forecasts possible with regard to probable barley' under subheading 11.02 E I a 1 of exports. Except in the case of an advance the CCT there is, however, no right to a fixing its absence thus does not prevent, refund because the regulation in force on in the present state of Community law, the day of exportation, that is to say, the acquisition of a right to a refund. This view moreover corresponds to that Regulation No 1383/72, does not lay down rates of refund for products which the Court of Justice adopted in coming under this tariff subheading. Case 35/71 ([1971] ECR 1083, ground of judgment 11). The Commission maintains that the law (c) On the third question relating to export certificates does not prescribe any specific penalty for the sort The plaintiff in the main action of irregularity mentioned by the court considers that the refund in respect of

the basic product, barley, must in any under one of the categories of products event be granted in the main for which a specific amount was fixed at proceedings because there is no the time of the exportation. If the difference in substance between the plaintiff in the main action had exported composition of barley on the one hand 'rolled barley grains' under tariff and rolled barley grains on the other. subheading 11.02 E I a 1, it would have had no right to the refund since the The defendant in the main action product was not included in the list in claims that a right to an export refund is Regulation No 1383/72 fixing the only acquired if the exported product in refunds. Moreover the method adopted question corresponds to one of the by the Bundesfinanzhof in its judgment of 13 January 1970 does not enable the descriptions of products and subheadings of the CCT for which the regulations of plaintiff in the main action to qualify for the Commission on force at the date of a refund in respect, of the exportation of the exportation provide a specific rate of rolled barley grains.

Neither in German law nor in exported and distributed on the world market. The refunds were thus expressly Community law is there a principle in fixed in a special measure adopted for accordance with which the Community this purpose by the Commission. The must ex aequo et bono pay refunds for provisions relating to refunds in which the law does not expressly provide. Regulation No 120/67 do not lay down Such arrangements are restricted to cases any principle in accordance with which where legal provisions have been adopted the exportation of a processed product in the public interest which adversely must also qualify for the refund available affect existing and protected legal for the corresponding cereal in its raw situations and which require intolerable state when no refund has been fixed for sacrifices from the persons concerned. the processed product itself.

The plaintiff in the main action did not The exporter thus enjoys a specific right comply with the Court's request to lodge to a refund only if the goods which he the expert's opinion to which it refers in exported could have been classified its written observations.

MERKUR-AUSSENHANDEL v HAUPTZOLLAMT HAMBURG-JONAS

The plaintiff in the main action, Agent, presented oral argument at the represented by Mr Modest of the hearing of 10 March 1976. Hamburg Bar, and the Commission of the European Communities, represented The Advocate-General delivered his

by Mr Kalbe, its Legal Adviser, acting as opinion at the hearing on 1 April 1976.

Law

1 By an order of 29 August 1975 which reached the Court on 3 October 1975 the Finanzgericht Hamburg submitted under Article 177 of the EEC Treaty preliminary questions on the interpretation of subheading 11.02 E I a 1 of the Common Customs Tariff.

JUDGMENT OF 8. 4. 1976 — CASE 106/75

3 Since no definition of the words 'flaked barley' and 'rolled barley grains' is contained initially in the Common Customs Tariff and since tariff heading 11.02 does not state expressly whether the manufacture of flaked barley involves prior hulling, reference must be made to the Explanatory Notes to the Brussels Nomenclature.

By hulled grains the said notes mean 'Grain from which the pericarp (the skin beneath the husk) has been partially removed. Grains of the bracteiferous varieties of barley are also classified in this heading if their husks (or hulls) have been removed; generally the floury kernel is then visible. (The husks can be removed only by grinding since they adhere too firmly to the grain kernel to be separated by mere threshing or winnowing — see Explanatory Note to heading 10.03).'

By 'rolled or flaked grain (principally barley and oats)' the notes mean grain 'obtained by crushing or rolling the whole grain. In this process the grain is frequently steam-heated or rolled between heated rollers but this is not regarded as removing the product from this Chapter.'

4 It is clear from the foregoing that flaked grains are produced by hulling which consists in removing a part of the husk from the grain.

Furthermore, although the Explanatory Notes to the Customs Tariff of the European Communities are applicable subsequent to the matters at issue they are based on the same interpretation in that they provide that 'flaked grains coming under this subheading are hulled and rolled grains which frequently still retain part of the husk.'

Apart from the foregoing, Article 16 of the said regulation provides that to the extent necessary to enable the products to be exported on the basis of quotations or prices for those products on the world market, the difference between those quotations or prices and prices in the Community may be covered by an export refund.

Those two provisions refer to different situations since the only consequences prescribed if goods are exported which do not correspond to what is stated in the certificate are, under Article 14 (2) of Regulation No 1373/67 of the Commission of 10 July 1970 on joint implementing rules for import, export and advance-fixing certificates for agricultural products subject to a single price system (JO No L 158 of 20 July 1970, p. 1), that the Member States in question are obliged to notify the Commission of this and that the deposit lodged may possibly be forfeited.

In addition, according to Article 1 (2) of Regulation No 1041/67/EEC of the Commission of 21 December 1967 on detailed rules for the application of export refunds on products subject to a single price system (OJ, English Special Edition 1967, p. 323), acceptance of the document by which the declarant states his intention to export the products in question and qualify for a refund shall be considered to be the completion of the customs export formalities.

JUDGMENT OF 8. 4. 1976 — CASE 106/75

8 Consequently the reply must be that the product exported may qualify for a refund even if it differs from that for which the certificate was issued.

9 Finally, if Question 2 is answered in the affirmative, it is asked whether, where at the relevant date no rate of refund was fixed for the product actually exported (rolled barley grains under tariff subheading 11.02 E I a 1), there exists a right to the grant of an export refund in respect of the basic product which may qualify for a refund (barley under tariff heading 10.03).

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, costs are a matter for that court.

On those grounds,

THE COURT

in answer to the questions submitted to it by the Finanzgericht Hamburg by order of 29 August 1975, hereby rules:

1. Flaked barley under tariff subheading 11.02 E I b 1 is manufactured from grains subjected to hulling which removes

MERKUR-AUSSENHANDEL v HAUPTZOLLAMT HAMBURG-JONAS

Delivered in open court in Luxembourg on 8 April 1976.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL REISCHL DELIVERED ON 1 APRIL 1976 <apnote>1</apnote>

Mr President. From 26 to 29 July 1972 the company Members of the Court, Merkur, which has its registered office in Hamburg, applied for export clearance The case on which I am giving my for goods which it described as 'flakes of opinion today is concerned with the barley not listed under subheading 11.02 problems of export refunds under the E I b 1 aa of the customs tariff or as common organization of the market in 'barley flakes with a raw fibre content of cereals. more than 0.9 per cent by weight and an ash content of more than 1 % by weight The following has to be said briefly with in relation to dry matter'. The exports regard to the facts: were made on the basis of licences in

1 — Translated from the German.