C-125/75

JUDGMENT OF THE COURT OF 2 JUNE 1976 1

Milch-, Fett- und Eier-Kontor GmbH v Hauptzollamt Hamburg-Jonas (preliminary ruling requested by the Finanzgericht Hamburg)

Case 125/75

Summary

1. Agriculture — Products subject to a single price system — Export refund — Regulation No 1041/67, Artikel 4 (1) — General application

2. Agriculture — Products subject to a single price system — Export refund — Variation — Grant — Conditions — Regulation No 1041/67, Article 4 — Interpretation

MILCH- FETT- UND EIER-KONTOR GMBH

and

HAUPTZOLLAMT HAMBURG-JONAS (Principal Customs Office, Hamburg-Jonas) on the interpretation of Article 4 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,

THE COURT

composed of: R. Lecourt, President, H. Kutscher and A. O'Keeffe, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, P. Pescatore, M. Sørensen, Lord Mackenzie Stuart and F. Capotorti, Judges,

Advocate-General: G. Reischl

English Special Edition 1968 (I), p. 176) applicable on the day of export in respect provides: of all third countries, since in its opinion it was not clearly shown that the goods '… to enable the products listed in bad been 'marketed' in Morocco. The Article 1 to be exported … on the basis plaintiff in the main action was able to of the prices for those products in show that the load exported had arrived international trade, the difference in Morocco and had been unloaded at between those prices in the Community Casablanca and therefore asked for may be covered by an export refund.' payment of the difference between the The second sentence of Article 17 (2) refund given and the higher amount which had been fixed in advance for it provides that the refund 'may be varied according to use or destination'. on 2 September 1970 in an export licence for deliveries to Morocco, Algeria The same provision is made in Article 4 and Tunisia. of Regulation (EEC) No 876/68 of the Council of 28 June 1968 laying down C — By order dated 13 November 1975 general rules for granting export refunds the Finanzgericht Hamburg referred the on milk and milk products and criteria following question to the Court of for fixing the amount of such refunds Justice for a preliminary ruling under (OJ, English Special Edition 1968 (I), p. Article 177 of the EEC Treaty:

fixed.' in question has been imported into a third country, be interpreted to the B — 1. In 1970 the plaintiff in the effect that the destination of the main action entered into a pooling products as mentioned in Article 4 of agreement for the export of German intervention butter. On the basis of this Regulation No 876/68 in respect of which an export refund has been agreement it sold 3 000 metric tons of varied may also be regarded as a third this butter to the Belgian company

Casablanca or Tangier. The Brabania circulation in accordance with the company, for its part, had undertaken on 23 December 1970 te deliver the load at customs regulations or is it sufficient for the goods, which have been Danzig to a Czechoslovakian company. This was in fact done. shipped, to-be unloaded in a port at a destination outside Europe and after 2. With regard to this delivery the storage and transhipment to be defendant in the main action paid the transported to a third country within basic amount of the export refund Europe?

3. If the answer to the first question is in (b) whether one of the purchasers and the negative: sellers of the goods who were Must the subordinate clause in the parties to the contracts of sale and first sentence of Article 6 (2) of purchase was resident at the Regulation No 876/68, whereby, destination outside Europe or in where Article 4 applies, the refund the country of such destination or shall be paid under the conditions had a branch there? laid down in paragraph (1), 'provided it is proved that the product has D — The order of the Finanzgericht reached the destination for which the Hamburg was registered at the Court refund was fixed', be interpreted to Registry on 17 December 1975. the effect that the goods must have been released into free circulation In accordance with Article 20 of the there in accordance with the customs Protocol on the Statute of the Court of regulations or is it sufficient for the Justice of the EEC written observations goods, which have been shipped, to be were lodged on 17 February 1976 by the unloaded in a port at a destination Commission of the European outside Europe and after storage and Communities, on 18 February 1976 by transhipment to be transported to a the defendant in the main action and on third country in Europe? 26 February 1976 by the plaintiff in the

Since outside Europe which was stipulated 1969 a 'butter mountain has been by the export licence? spoken of and this has continued to 5. Is it of importance with regard to the increase. In spite of measures taken by interpretation of Article 4 (1) of the Commission there was still no sign Regulation No 1401/67 and of Article of these surpluses' being absorbed. 6 (2) of Regulation No 876/68 which were referred to in the second, third The plaintiff in the main action which at and fourth questions: the time was the Bundeszentrale der (a) whether the applicant exporter was deutschen Milchwirtschaft (Federal aware at the relevant date that the Central Office of the German Dairy goods would ultimately be shipped Industry) and the capital of which was to the third country in Europe; or entirely held by two bodies governed by

public law, collaborated closely with the made subject subsequently to proof of national authorities of, the Federal 'marketing' of the goods in Morocco, its Republic competent with regard to food. 'impact on the Moroccan market' and its The latter asked it during the summer of 'penetration' of this market. Nor did the 1970 to make greater efforts to absorb plaintiff in the main action think that the butter surpluses. Since the clearance this transaction would create difficulties. of the quantity which had to be dealt Further in answer to a written question with exceeded its own capacity, it joined the Commission stated on 18 March with other private butter dealers. This 1970 (OJ C 38 of 1. 4. 1970, p. 1) was how the famous 'butter pool' was that Article 8 of Regulation No born which did in fact succeed in 1041/67/EEC: reducing the butter stocks by some 41.000 metric tons. 'stipulates that the part of the refund in excess of the lowest refund rate is paid The decision to export 10 000 metric only if it is proved that the goods have tons to North Africa was not taken actually arrived in the country of because the refund granted in respect of destination. After that the Commission this area was apparently the highest, but can no longer follow what becomes of on an assessment of the sales the goods exported'. possibilities.

The the entitlement to an export refund. fact that the Corman company and the They restricted themselves to speaking of plaintiff in the main action belong to the 'proof which had to be adduced or same pool does not alter the fact that in additional proof which might be international trade a purchaser does not required. Further this regulation was not reveal to his supplier the name of the applied uniformly by Member States. The customer to whom he will sell the goods authorities of the Federal Republic in his turn. imposed the strictest conditions and were guided by fiscal rather than economic 2. Admissibility of the questions considerations (these problems are dealt with in that country by customs officials).

JUDGMENT OF 2. 6. 1976 - CASE 125/75

It does not enable it to be (b) Questions 2, 3 and 4. The Finanz said whether the additional proof referred gericht is in fact asking the Court to to in the first paragraph 'may be made apply Regulation No 1041/67 to the obligatory' in respect of the exporter only actual facts in the case. by regulations of the Commission or the Council or whether such a decision is for As to Question 4, goods can be 'destined the Member States or until what time for a country' only by their owner or the this proof may be required. person who has power to dispose of

particular: 3. Answers to the questions 'Since Regulations Nos 876/68 and 1041/67 speak of "country of (a) Question 1. The phrase 'into a third destination" and "destination", who country', used in Article 4 (1), does not determines this destination in fact? Have mean the same thing as 'country of the concepts "country of destination" destination' or 'destination' etc. This and "destination" the same content and provision is aimed at preventing, first, meaning in the Community provisions 'multi-stage movements of goods (in a in question?' closed circuit), that is, exporting goods with the benefit of a high refund and The validity of the provisions in then reimporting them into the question. Community subject to an import levy lower than the refund and, secondly, Article 4 (1) of Regulation No 1041/67 cases in which the refund is higher than provides that in certain cases Member the total costs of manufacture and States may require additional proof. An transport costs to a place outside the enabling provision which is limited to three-mile limit. Article 4 never applies defining by the words 'in certain cases' when in accordance with Article 6 (2) of the conditions which must be fulfilled Regulation No 876/68 and Article 8 (1) for it to operate can have no effect of Regulation No 1041/67 it is necessary

to prove, in addition to the export, the That judgment cannot therefore be fact that the goods have arrived in the transposed on to the legal provisions to country of destination. The proof of be applied in the present case. importation referred to in Article 4 is not complementary to proof of arrival in the (c) Question 3. Article 6 (2) of country of destination (Article 6 (2) of Regulation No 876/68 cannot be Regulation No 876/68), but solely understood as meaning that the product complementary to proof of exportation is regarded as having reached its (Article 6 (1) of Regulation No 876/68). destination only if it has entered into free circulation at the destination.

Where (b) Question 2. The answer suggested refunds are fixed in advance the identity for the first question already implies that of the exporter is determined when the the goods do not have in addition to be application for an export licence is put into free circulation in a third lodged. The expression 'reached the country. The phrase 'has reached its destination' or 'the country of destination' means no more than destination' in Article 6 (2) of Regulation 'reached'. This word expresses a pure No 876/68 and Article 8 (1) of matter of fact which cannot be equated Regulation No 1041/67 must not be with the legal fact of 'entry into free understood by reference to occurrences circulation'. which take place after the time when the product reaches its destination and which Neither the defendant in the main action are not under the control of the person nor the Commission attaches importance entitled to the refund.

JUDGMENT OF 2. 6. 1976 - CASE 125/75

of Article 4 (1) of Regulation No Until the date of the proceedings before 1041/67. the Finanzgericht the plaintiff in the main action did not know that after the If the concept of 'export to third arrival of the butter in Morocco the countries' contained in Ragulation No Brabania company had (so it appears) 19/62 and in the recitals to Regulation sold it in Czechoslovakia and sent it to No 804/68 which simply describes the Poland. distance in relation to the economic territory, actually implies the arrival of It is only the route followed by the goods the product on the market of the third which can be of importance in the country (cf.

The regulations in additional condition. In no circum question speak only of 'country of stances would it thus be possible to destination' and not of 'country of the require less strict conditions for the purchaser'. concept of 'arrival in the country of destination' than for that of 'export to B — The defendant in the main action third countries'. states that since it is necessary, having regard to the distance of the Community Where the refund is varied according to markets from those of the countries of the destination the proof required as a destination and the special import condition of payment amounts to conditions obtaining in certain countries establishing importation into the country of destination (access charges, prices of destination.

prevail. It does not matter whether after fixing the amount of the refunds if proof reaching the market in question the of export to any third country sufficed. It

is a generally recognized principle of law refunds cover, would mean nothing that he who claims a right must establish without reference to the markets for the conditions to which this right is which these prices have been established. subject in so far as there are doubts in this respect. It is no different with regard to the variable refund. The Commission has the C — The Commission makes the option of fixing an amount of refund following observations: applicable in a general way in respect of all third countries and leaving to the 1. The conditions giving rise to the right exporter the freedom to choose the market on which the exported product 'Destination' must be understood to will ultimately be marketed. However it mean the destination of the exports could also adapt the amount of, the which must be stimulated by means of a refund to the special situation of the differentiated rate of refund. In the market in one or more third countries in export licence issued to the plaintiff in order to open or keep this market for the main action the 'destination' was Community exports. Since the essential limited to 'Algeria, Morocco and Tunisia'. objective of the rules governing the calculation of the refund is thus to The argument that Community law does stimulate marketing, it would not be not make this concept of a product's logical to interpret Article 6 (2) of having 'reached' its 'destination depend Regulation No 876/68 according to other on any other condition cannot be criteria. The requirement that proof must upheld. It is based on a formal and be given that the goods have reached the separate analysis of the provisions in 'destination' is easily explicable by the question and disregards the economic Commissions' concern to grant specific objective of variable refunds as a criterion aids only when the objective pursued by of interpretation. such aids is attained. Since the objective is marketing in the country of The possibility of varying the amount of destination, the destination is reached the refund according to the 'destination' within the meaning of Article 6 (2) when was provided for in order to facilitate the the goods were marketed on this market. sale of Community products on markets which, if they had only the normal For Community butter to be actually amount of refund, they could not marketed in Morocco it must be

for the goods to be consumed in the evidence of refunds being obtained country of destination for the fraudulently. Commission has made this a condition only in certain exceptional cases. In the The above answers the questions raised. present case the goods certainly reached As regards Article 4 (1) of Regulation No Moroccan territory but not the butter 1041/67 it may be added that it appears market of that country. This concept clearly from the recitals to that regulation agrees with that of the Court in Case that the said article aims to give the 6/71 (mentioned above) according to competent authorities of the Member which the export for which a refund is States the opportunity of counteracting granted does not constitute a succession the abuses to which the system of of formal operations which may be refunds may give rise when for example interrupted at any time, but on the the applicable rates of refund and levy in contrary represents from the economic respect of the same product are different point of view and from that of the system or when an attempt is made to use the of refunds a single process enabling 'characteristics of the exported products' Community goods to be sold on a by declaring on export that they fall foreign market to which they have access under a heading in the tariff of refunds owing to the refund which makes them for which a sizeable aid is provided and competitive. then reimporting them as products coming under another heading for which 2. Proof the amount of the levy is nil or very small or when there is doubt whether

EIER-KONTOR v HAUPTZOLLAMT HAMBURG-JONAS

Law

1 By order dated 13 November 1975 received at the Court on 17 December 1975 the Finanzgericht Hamburg has referred to the Court under Article 177 of the EEC Treaty certain questions for a preliminary ruling on the interpretation of Article 4 of Regulation No 1041/67/EEC of the Commission of 21 December 1967 laying down detailed rules for export refunds on products subject to a single price system (OJ English Special Edition 1967, p. 323).

These questions have been raised in the context of proceedings relating to the amount of the export refund applicable to a consignment of German intervention butter which was unloaded in Casablanca and then re-forwarded

to a Polish port where it was to be delivered to a Czechoslovakian purchaser.

The defendant in the main action paid in respect of this export the basic amount of refund applicable on the day of export for all third countries whereas the plaintiff in the main action had obtained an export licence containing an advance fixing of the refund for Morocco, Algeria and Tunisia, destinations which give rise to a higher refund.

If the answer to the second or third question is in the affirmative the fourth question asks whether the requirements that the product shall have been imported into a third country (Article 4 (1) of Regulation No 1041/67) and that the goods shall have reached their 'destination' (Article 6 (2) of Regulation No 876/68) are also fulfilled if the goods were, by virtue of the relevant contracts of sale, already destined ultimately, before completion of the customs export formalities within the meaning of Article 1 (2) of Regulation No 1041/67, not for the destination outside Europe laid down in Article 6 (2) of Regulation No 876/68 but for another third country in Europe with a lower refund rate and were in fact transported thence in accordance with the detour via the third country outside Europe which was stipulated by the export licence.

The fifth question asks whether it is of importance with regard to the interpretation of Article 4 (1) of Regulation No 1041/67 and of Article 6 (2) of Regulation No 876/68 which were referred to in the second, third and fourth questions:

(a) whether the applicant exporter was aware at the relevant date that the goods would ultimately be shipped to the third country in Europe; or

(b) whether one of the purchasers and sellers of the goods who were parties to the contracts of sale and purchase was resident at the destination outside Europe or in the country of such destination or had a branch there.

3 Since these questions mainly raise the problem of the objective of the system of refunds, it is fitting to give a general answer to them.

5 The reason why the refund varies according to the destination of the products is, according to the fourth recital to Regulation No 876/68, that 'markets in the countries of destination are at varying distances from Community markets and special conditions apply to imports in certain countries of destination'.

It follows from Article 4 and the recitals in the preamble to the aforementioned regulation that the amount of the refund depends on the conditions of the market which the product in question must enter and as a result on the actual import of the product into the given country of destination.

The variation in the refund takes place by reason of the desire to take account of the peculiar characteristics of each import market on which the Community wishes to play a part.

6 If it sufficed for the goods simply to be unloaded to qualify for payment of the refund at a higher rate, the raison d'être of the system of varying the refund would be disregarded and abuse would be made possible to the detriment of Community interests.

It is therefore necessary for the goods to have been cleared through customs and put into free circulation at the destination.

JUDGMENT OF 2. 6. 1976 - CASE 125/75

proceedings are, so far as the parties to the main action are concerned, 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

In answer to the questions referred to it by the Finanzgericht Hamburg by order of that court dated 13 November 1975 hereby rules:

(1) Article 4 (1) of Regulation No 1041/67 is a provision of general application and applies in all cases where there is a refund, even if the refund has been varied according to the destination;

(2) The said article must be interpreted in conformity with Article 6 of Regulation No 876/68 and, where the refund is varied, means that the goods must have been given customs clearance and put into free circulation at the destination;

Registrar President

OPINION OF MR ADVOCATE-GENERAL REISCHL DELIVERED ON 19 MAY 1976 1

Mr President, criteria for fixing the amount of such Members of the Court, refunds were laid down in Regulation No. 876/68 of the Council of 28 June As in other organizations of the market it 1968 (OJ English Special Edition 1968 is provided in the common organization (I), p. 234). I shall return to these in of the market for milk and milk products detail later. At present I mention only (Regulation No 804/68 of the Council of Article 5 according to which the refund 27 June 1968, OJ English Special may be fixed in advance if the party Edition 1968 (I), p. 176) that to enable concerned so requests when applying for the products, including butter, covered the export licence. Further, Article 6 by the organization of the market to be should be mentioned, according to exported the difference between the which, where the refund is varied prices in international trade may be according to the destination, it is paid covered by an export fund (Article 17). upon proof 'that the product has reached The refund according to Article 17 (2) the destination for which the refund was may be varied according to use or fixed'. destination. In addition, the detailed rules for the General rules for granting refunds on the application of export refunds should be export of milk and milk products and mentioned which the Commission laid

1 — Translated from the German.