C-23/79

JUDGMENT OF 27. 9. 1979 — CASE 23/79

In Case 23/79

REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court], Munich, for a preliminary ruling in the action pending before that court between: GEFLÜGELSCHLACHTEREI Freystadt GMBH & Co. KG, FREYSTADT,

and

HAUPTZOLLAMT [Principal Customs Office] Hamburg-Jonas,

on the interpretation of the provisions of Article 9 of Regulation No 123/67/EEC of the Council of 13 June 1967 on the common organization of the market in poultry-meat (Official Journal, English Special Edition 1967, p. 63), of Articles 4 and 6 of Regulation No 176/67/EEC of the Council of 27 June 1967 laying down general rules for granting export refunds on poultry-meat and criteria for fixing the amount of such refunds (Official Journal, English Special Edition 1967, p. 144) and of Articles 3, 4, and 8 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 (Official Journal, English Special Edition 1967, p. 323) in conjunction with those of the Protocol on German Internal Trade and Connected Problems,

Facts and Issues

JUDGMENT OF 27. 9. 1979 — CASE 23/79

desfinanzhof decided on 9 January 1979, 2. As noted above, Article 9 of Regu­ after inviting the Federal Minister of lation No 123/67 lays down the basic Finance to intervene in the main principles of the system of granting proceedings by an order dated 16 August export refunds in the sector of poultry- 1978, to stay the proceedings and to meat.

refer the following questions to the Court of Justice of the European Article 4 of Regulation No 176/67 of the Communities for a preliminary ruling: Council of 27 June 1967 laying down general rules for granting export refunds on poultry-meat and criteria for fixing the amount of such refunds (Official 1. Does the concept of exportation Journal, English Special Edition 1967, p. within the meaning of Regulation No 144) provides that: 123/67/EEC (especially Article 9), Regulation No 176/67/EEC (es­ "Where the world market situation or pecially Articles 4 and 6) and Regu­ the specific requirements of certain lation No 1041/67/EEC (especially markets makes this necessary, the refund Articles 3 (1), 4 (1) and 8) presuppose for the Community may be varied that the goods were or would be put according to the destination of the into free circulation at their destina­ products listed in Article 1 (1) of Regu­ tion even if the rates of refund for the lation No 123/67/EEC".

goods are not varied according to the destinations? Article 6 of Regulation No 176/67 provides that:

"(1) The refund shall be paid only upon the meaning of Article 9 of Regulation No 123/67 must be interpreted in the proof that the product in respect of which customs formalities have same way as that referred to in Article 20 been completed: of Regulation No 19/62 of the Council of 4 April 1962 (Journal Officiel 1962, p. 933). That concept, according to the — Has left the geographical judgment of the Court on 27 October territory of the Community 1971 in Case 6/71 (Rheinmühlen unaltered, in the case referred Düsseldorf v Einfuhr- und Vorratsstelle fur to in Article 1 Getreide und Futtermittel [1971] 2 ECR 823) presupposes at least that the goods " have been or will be put into free circu­ lation in a non-member country. Doubts as to the accuracy of this interpretation and Article 8 of the same regulation may arise, however, on reading Regu­ provides in particular that for the lation No 176/67, which lays down the application of the first subparagraph of basic rules for the grant of refunds on Article 6 (2) of Regulation No 176/67 the exportation of poultry-meat. Article the party concerned must submit certain 6 (1) of the regulation provides that the documents listed therein. refund is to be paid upon proof that the products have been exported from the Community; it is only in cases where, The first paragraph of the Protocol on German Internal Trade and connected under Article 4 of the regulation, the amount of the refund is varied according problems provides that: to the country of destination of those products, that Article 6 (2) provides that "Since trade between the German payment of the refund is subject to proof territories subject to the Basic Law for that the product has reached the country the Federal Republic of Germany and of destination for which the refund was the German territories in which the Basic fixed. It is possible, however, that those Law does not apply is a part of German provisions concern only certain internal trade, the application of this requirements as to proof which are not Treaty in Germany requires no change in listed completely and that, consequently, the treatment currently accorded this they do not define the basic concept of trade." exportation.

export refunds on products subject to a Protocol on German Internal Trade and single price system. Under Article 3 (1) connected problems of 25 March 1957 of that regulation payment of the refund are intended only to relieve the Federal is conditional upon proof that the Republic of Germany of the obligation product has left the geographical to apply the rules of Community law to territory of the Community, and Article German internal trade; the dispensation 8 regulates the case referred to in the thus granted does not have the result of first subparagraph of Article 6 (2) of making the German Democratic Regulation No 176/67 (varying rates of Republic part of the Community, but refund according to destination). In means only that a special system applies addition Article 4 of Regulation No to it as a territory which is not part of 1041/67 provides that in certain cases the Community; the importation of the Member States may require as a goods into the Federal Republic of condition for payment of the refund Germany under the Protocol cannot proof not only that the product has left therefore be regarded as importation the geographical territory of the from a non-member country since it is Community, but also that the product in German internal trade (paragraph 6 of question has been imported into a non- the decision). Under the Protocol, the member country and, where appropriate, German Democratic Republic is neither proof of the conditions under which it a Member State of the European was imported. According to the Economic Community nor, as regards judgment of the Court of 2 June 1976 in German internal trade, a non-member Case 125/75 (Milch-, Fett- und Eier- country, but is subject to special rules Kontor GmbH v Hauptzollamt Hamburg- (paragraph 8 of the decision). However, Jonas [1976] 1 ECR 771), that provision as Case 14/74 concerns the movement of is of general application and applies in all goods from the German Democratic cases where there is a refund. Those Republic to the Federal Republic of rules, too, may be held to contain no Germany, the Bundesfinanzhof considers specific definition or even amendment of that that judgment cannot readily be the concept of exportation contained in applied to the case at issue before it. Regulation No 123/67.

II — Written observations sub­ mitted to the Court The plaintiff in the main action claims that the above-mentioned provisions should be interpreted as meaning that A — Observations submitted by the where the refund rates are not varied, it plaintiff in the main action is sufficient to prove that the goods have left the geographical territory of the Community unaltered. As to the facts of the case, the plaintiff in the main action states that it is not disputed that it sold and delivered goods at the world-market price to buyers established in a non-member country other than the German Democratic It criticizes the conclusion drawn by the Republic and that it passed on the Bundesfinanzhof from the judgment delivered by the Court in Case 6/71 and refunds and monetary compensatory claims that the concepts of exports used amounts to the buyers in the form of a price reduction; the merchandise reached in Regulation No 123/67 and Regulation the German Democratic Republic No 19/62 respectively are not the same and therefore the above-mentioned without there having been any con­ tractual relationship between the plaintiff judgment of the Court concerning the and the second buyer. concept of "exports to third countries" as used in Regulation No 19/62 cannot be extended to the concept of "exports" The plaintiff suggests that the first within the meaning of Article 9 of Regu­ question referred to the Court for a pre­ lation No 123/67. Case 6/71 did not liminary ruling should be divided into deal with the concept of "exportation" two parts. The first subsidiary question is but the concept of "exports to third whether Article 9 of Regulation No countries" and the definition thereof in 123/67, Articles 4 and 6 of Regulation relation to the other concept, also used No 176/67 and Articles 3, 4 and 8 of in Regulation No 19/62, of "exports to Regulation No 1041/67 are to be a Member State". Those proceedings interpreted as meaning that where the concerned the case where refund rates refund rates have not been fixed at had been fixed which varied according to different levels depending on the the differences in prices on the export destination of the exported products, markets in question; it was for this proof must be submitted that the reason that the Court held that payment products have reached or been imported of the refunds for exports to non- into a non-member country in addition member countries was subject to proof

Provision for exceptions to the rule in the first subparagraph of Article 6 (2) is made in the second subparagraph: it was In the present case, however, the Court on the basis of this, together with Article is not asked to define two concepts of 6 (3), that the Commission adopted export, on the one hand "exports to third countries" and on the other Regulation No 1041/67, which must be interpreted strictly. According to the "exports to a Member State" and the ninth recital in the preamble to Regu­ refund rates are not varied according to lation No 1041/67 where the rate of the the destination of the products in refund is varied according to the question. In the circumstances it would destination of the exported products, be more correct to define the concept of proof must be furnished that the product exports within the meaning of Article 9 has reached the destination for which the of Regulation No 123/67 in the light of refund was fixed. This solution the provisions of Regulations No 176/67 and 1041/67. corresponds to the first subparagraph of Article 6 (2) of Regulation No 176/67. Article 4 (1) of Regulation No 1041/67 states that in certain cases, in particular by reason of the nature of the export markets and thus wherever the rate of refund must be varied owing to the The content of Regulation No 176/67 is specific requirements of certain markets (Article 4 of Regulation No 176/67), particularly important because this regu­ Member States may require, as a lation was also issued by the Council condition for payment of the refund, because, according to its title, it lays proof not only that the product has left down general rules for granting export geographical territory of the Com­ refunds on poultry-meat and because its munity, but also that the product in adoption was already envisaged in the question has been imported into a non- fourth subparagraph of Article 9 (2) of member country. Moreover, Regulation Regulation No 123/67. Article 4 of No 1041/67 makes payment of the Regulation No 176/67 provides that the export refund likewise subject to proof refund may be varied according to the only that the product has left the geo­ destination of the products exported. Where that is the case, the refund is to graphical territory of the Community unaltered (Article 3 (1) of Regulation be paid only upon proof that the No 1041/67). products have actually reached the destination for which the refund was fixed (first subparagraph of Article 6 (2). In every other case the refund is to be paid upon proof that the products have been exported from the Community (Article 6 (1)). Thus proof that the If the Court is unable to accept the exported products have reached the principal argument put forward by the destination for which the refund was plaintiff in the main action, then the

plaintiff argues that it has never been a the goods in question were forwarded to condition that the goods should be put the German Democratic Republic into free circulation in the country of without having been put into free circu­ destination. According to the plaintiff lation in Austria and in Czechoslovakia neither Regulations Nos 123/67 and does not damage its claim to the grant 176/67 of the Council, nor Regulation and payment of refunds and monetary No 1041/67 of the Commission, compensatory amounts. Forwarding of expressly require that they enter free this kind is possible in connexion with circulation. Only in Article 4 (1) of almost any exportation to non-member Regulation No 1041/67 is the possibility countries, but none of the relevant mentioned of Member States' requiring provisions raises any objection to the "in certain cases" proof that the product grant of a refund. In the present case the has been imported into a non-member refunds were not fixed particularly with country and proof of the conditions regard to the special conditions of the under which it was imported. Those internal markets in certain non-member regulations, especially Regulation No countries (the Austrian market in 1041/67, differ appreciably from sub­ particular), nor were they designed to sequent regulations, in particular Regu­ compensate for import duties in certain lation No 192/75, which replaced Regu­ non-member countries (Austria in lation No 1041/67. Prior to the adoption particular). According to the plaintiff the of Regulation No 192/75 the relevant meaning and purpose of the refunds and provisions of Community law did not the monetary compensatory amounts require proof that the product had been have been respected. put into free circulation in a non- member country, and certainly not where the refunds were the same for all The plaintiff in the main action claims that the Protocol on German Internal non-member countries. The judgment delivered by the Court in Case 125/75 Trade and connected problems of 25 must be interpreted, on the basis of a March 1957 precludes any other reply. contrario reasoning, to the effect that According to the judgment delivered by where the rate of refund is uniform, it is the Court in Case 14/74 this Protocol

Once the goods were exported from the regulation in order to enable the territory of the Community as part of a products to be exported. Article 3 (2) of commercial operation having no Regulation No 176/67 shows that the connexion with German internal trade amount of the export refunds is within the meaning of the Protocol, their obviously determined by the actual subsequent delivery to the German conditions obtaining on the market of Democratic Republic must be viewed in non-member countries. The objective the light of the same criteria as those which the export refunds are designed to applied to a consignment to another achieve can only be accomplished when country. the Community products become involved in economic exchanges in non-member

Regulations principle that the goods have been put Nos 176/67 and 1041/67 are based on into free circulation in the country of Regulation No 123/67; in the destination. None of the Community law implementing regulations the concept of provisions in question describes or export, as a condition for entitlement to defines in detail the concept of "export" a refund, must be understood in the light or the requirement "that the products of the basic rules contained in the have been exported outside the organizations of the market. Community". Only the ideas and objectives of the legislature, expressed in the relevant legal provisions, can help to Although the judgment which the Court decide the answer to the question delivered in Case 125/75 is not directly whether the term "export" as used in relevant to the present case, the Court Community legislation on export refunds clearly intimated in that judgment that, presupposes that the goods have been put having regard to the aim of the export into free circulation. The Federal refund, the deciding factor for Government recalls the purpose of the entitlement to a refund is that the goods Community legislation on refunds as have been put into free circulation in a embodied in Article 9 of Regulation No country in relation to which provision 123/67 and the relevant recital in the for such entitlement has been made.

GEFLÜGELSCHLACHTEREI FREYSTADT v HAUPTZOLLAMT HAMBURG-JONAS

customs there, the objective of the German internal trade and in the refund would not have been achieved, circumstances no export refund is because the goods in question would not payable. have been placed on the Austrian market. Only in exceptional circumstances, such as the disappearance of the goods in question whilst in transit under customs C — Observations submitted by the control or the delivery of the goods to a Commission of the European free zone for release for consumption or Communities

JUDGMENT OF 27. 9. 1979 — CASE 23/79

decision. Cases 6/71 and 125/75, prove that the goods in question have arrived in that country, have been imported into it and placed on the market. If the poultry- meat at issue in the main action was However, a detailed examination of imported, marketed and taken for these questions is not necessary in the consumption exclusively in the German present case for Community law Democratic Republic, that country is regarding refunds shows clearly that the objectively the only country of destin plaintiff in the main action cannot have ation which the goods have reached as acquired the right to the refund claimed far as the Community provisions

Republic. This means that the situation is comparable to that which would arise if refunds for exports from the Federal III — Oral procedure Republic of Germany were varied according to the country of destination. Admittedly the provisions which have been adopted for granting non-uniform At the hearing on 11 July 1979 oral refunds (Article 8 of Regulation No observations were submitted by the 1041/67, now Article 11 of Regulation plaintiff in the main action, represented No 192/75) cannot be applied as they by Mr Landry of the Hamburg Bar, the stand; however, the competent German Government of the Federal Republic of authorities could refer to Article 4 of Germany, represented by Dr Seidel, Regulation No 1041/67 (now Article 6 Ministerialrat in the Federal Ministry for of Regulation No 192/75) in order to Economic Affairs, and the Commission decide whether the rules in question have of the European Communities, represen been observed. ted by its Legal Adviser, Mr Gilsdorf.

The representative of the plaintiff in the clearly defining the concept of export on main action dealt mainly in more detail which the entitlement to a refund with the arguments which he submitted ("materieller Erstattungsanspruch") rests. in the course of the written proceedings, It is therefore necessary to refer to the stressing the fact that in his opinion the objectives of the rules in question. first question relates solely to the concept of export without regard to any other conditions which might apply to a refund.

In any mainly as a result of the fact that only event entitlement to a refund exists only one body, the Hauptzollamt Hamburg- if the goods in question have in fact Jonas, is empowered to grant export reached the country of destination. If, refunds and the competent authorities where the rates are uniform, Community may, on the basis of reports drawn up by legal provisions are restricted in principle that office, carry out checks on the to requiring proof that the goods have undertakings concerned, mainly on the basis of their commercial records. He left the geographical territory of the added that the main features of the Community unaltered, this is dictated purely by practical considerations in German system were adopted, at order to facilitate trade; nevertheless, Community level, by Directive No under Article 6 (3) of Regulation No 77/435 /EEC on 27 June 1977 on 176/67 which was implemented mainly scrutiny by Member States of by Article 4 of Regulation No 1041/67, transactions forming part of the system the exporter must always be prepared to of financing by the Guarantee Section of have to prove more than the simple fact

JUDGMENT OF 27. 9. 1979 — CASE 23/79

Decision

1 By an order of 9 January 1979 which was received at the Court on 5 February 1979, the Bundesfinanzhof referred two questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty on the inter­ pretation of certain Community provisions governing export refunds for products subject to the common organization of the market in poultry-meat.

2 It appears from the order referring the matter to the Court that the questions arose in the course of proceedings between a German undertaking and the customs authorities of the Federal Republic of Germany regarding the latter's refusal to grant export refunds for a quantity of frozen chickens which, after having been sold to a buyer in a non-member country, left the geographical territory of the Community on 28 and 30 August 1973 and were delivered, without being transhipped and after travelling via the territory of a non-member country under customs control, to the German Democratic Republic where they were put into free circulation.

3 The first question raised by the Bundesfinanzhof concerns the concept of "export" within the meaning of the provisions concerning the grant of export refunds. The question is whether, as the plaintiff in the main action claims, the goods can be considered as having been exported within the meaning of those provisions as soon as they have left the geographical territory of the Community, or whether, as the German authorities contend the goods must have been put into free circulation in the non-member country for which they were destined, and whether this is so even where the refund rates are not varied according to the destination of the goods.

7 The result is that in every case where Community law regulates trade between the Community and non-member countries, the Federal Republic of Germany is authorized to consider that such rules are not applicable to German internal trade. The concept of "export" used in the Community regulations concerning the common organization of the markets in agri­ cultural products does not therefore apply to trade in goods between the Federal Republic of Germany and the German Democratic Republic.

8 The plaintiff in the main action, however, claims that the Protocol does not apply in this case. It points out that the goods were sold and delivered to a buyer in a non-member country and that two purchasing transactions were

JUDGMENT OF 27. - 1979 — CASE 23/79

concluded: on the one hand between undertakings in the Federal Republic of Germany and in Austria, on the other between undertakings in Austria and the German Democratic Republic. That is not the decisive factor, however; for a transaction to form pan of German internal trade within the meaning of the Protocol, it is necessary, and at the same time sufficient, that the goods are put into free circulation in the German Democratic Republic without having been in free circulation in a third country after having left the territory of the Federal Republic of Germany. The sequence of commercial transactions and their forms do not need to be taken into account.

9 The answer to the questions which have been referred to the Court should therefore be that she concept of "export" within the context of the Community provisions concerning export refunds for agricultural products subject to the common organization of the markets must be interpreted as meaning that it does not refer to trade forming pan of German internal trade within the meaning of the Protocol of 25 March 1975.

GEFLÜGELSCHLACHTEREI FREYSTADT v HAUPTZOLLAMT HAMBURG-JONAS

that it does not refer to trade forming part of German internal trade within the meaning of the Protocol on German Internal Trade and connected problems of 25 March 1957.

Kutscher Mertens de Wilmars Mackenzie Stuart Pescatore Sørensen

O'Keeffe Bosco Touffait Koopmans

Delivered in open court in Luxembourg on 27 September 1979.

A. Van Houtte J. Mertens de Wilmars Registrar President of First Chamber, acting as President