C-118/79

REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court] for a preliminary ruling in the proceedings pending before the court between

GEBRÜDER KNAUF·" WESTDEUTSCHE GIPSWERKE

and

HAUPTZOI.LAMT [Principal Customs Office] HAMBURG-JONAS

1 — Language of tiu· Case: Gorman.

JUDGMENT OF 20. 3. 1980 — CASE 118/79

Facts and Issues

The facts of the case, the procedure and under outward processing arrangements the observations submitted under Article which had been authorized by the 20 of the Protocol on the Statute of the German customs authorities. It re- Court of Justice of the EEC may be imported into the Community the summarized as follows: compensating product manufactured from that starch and intended for the building sector.

I — F a c t s and p r o c e d u r e 2. The Hauptzollamt Hamburg-Jonas, the defendant in the main action, charged a total sum of DM 7 103,40 as export levies on the basis in particular of 1. Gebrüder Knauf Westdeutsche Regulation (EEC) No 2443/74 of the Gipswerke, the plaintiff in the main Commission of 27 September 1974 and action, declared to the customs auth- Regulation (EEC) No 2527/74 of the orities in September and October 1974 Commission of 4 October 1974 fixing special maize starch coming under tariff the export levies on starch products heading 11.08 A I of the Common (Official Journal 1974, L 262, p. 5 and Customs Tariff for export to Austria L 271, p. 20) and of Regulation (EEC)

KNAUľ WESTDEUTSCHE GIPSWERKE v HAUPTZOLLAMT HAMBURG-JONAS

The undertaking appealed to the Bun­ "If the world market price of, on the one desfinanzhof [Federal Finance Court] hand, maize or common wheat, and, on which in its turn stayed the proceedings the other, ... appreciably and and, in accordance with Article 177 of persistently exceeds 8.20 and . . . units of the EEC Treaty, submitted the following account . . . an export levy to compensate question to the Court of Justice for a for the difference between prices on the preliminary ruling: world market and supply prices for these basic products within the Community shall be introduced for products falling "Must the word 'export' within Article 7 within headings 11.08 A . . . of the (2) of Regulation (EEC) N o 1132/74 be Common Customs Tariff. The interpreted as meaning that an export Commission shall fix the export levy". levy must be imposed on products coming within tariff heading 11.08 A of the Common Customs Tariff even if they 4. The order making the reference were exported in September and October shows that the undertaking claimed 1974 under outward processing before the Bundesfinanzhof inter alia arrangements and were later re-imported that the Community regulations on as processed goods?" export levies contain only outline provisions concerning the rates of the duties and the time when they are to be Article 1 (1) of Regulation (EEC) N o imposed and that furthermore national 1132/74 of the Council of 29 April 1974 law on such levies is to be applied. The on production refunds in the cereals and undertaking considers that the German rice sectors (Official Journal 1974, provisions in question, in particular L 128, p. 24) provides that: Article 52 of the Zollgesetz [Customs Law] and also Article 18 of the Gesetz zur Durchführung der Gemeinsamen "Member States shall grant a production Marktorganisationen [Law implementing refund on maize and common wheat for the common organizations of the the manufacture of starch equal to the markets] provide for exemption from the difference per 100 kilograms between the levy in the case of the exportation of threshold price for each of these processed products under outward products . . . and 8.20 units of account". processing arrangements.

The undertaking further claimed that the disturbed in the event of an appreciable spirit and objectives of Regulation No and persistent increase in the prices of 1132/74 preclude the imposition of such maize, common wheat and broken rice a levy since those products are not sold on the said markets. The purpose of the on the markets of non-member countries imposition of the export levy is moreover and accordingly do not disturb those to reduce to an appropriate level the markets but are re-imported into the advantages granted to Community Community following processing into a manufacturers by the grant of a different product. It is in particular production refund. This Court has contrary to that regulation to suppose doubts as to whether the objectives of that the export charge is intended to the imposition of the export levy also prevent scarce Community products justify the application of that levy even from being used instead of products when goods are exported under outward from non-member countries. processing arrangements, since the exported goods do not ultimately burden the markets in non-member countries since (and provided that) they are The defendant in the main action brought back again into the territory of disputed those arguments. It claims that the EEC after they have been processed. Article 3 (2) of Regulation (EEC) No Since they remain the property of the 645/75 of the Commission of 13 March declarant within the Community it is 1975 laying down common detailed rules furthermore not immediately evident that for the application of the export levies there is reason to reduce the advantages and charges on agricultural products granted to him within the Community to (Official Journal 1975, L 67, p. 16), an appropriate level." which was adopted after the facts giving rise to this action, contains an exhaustive list of the exemptions, excluding exports effected under outward processing The Bundesfinanzhof further stated the arrangements in a non-member country, Regulation No 645/75 is of no assistance and merely clarified the existing legal for the purpose of the interpretation of position. the expression "export". It takes the view that it is impossible simply to conclude that the exceptions expressly laid down by the regulation are the only ones 5. The Bundesfinanzhof observes that: which result from the meaning and purpose of the rules and, in particular, that even previously it was necessary to impose levies in the case of exportation "According to the recitals of the under outward processing arrangements. preamble to Regulation N o 1132/74 the production refund . . . is granted in order that the starch industry may obtain the basic products which it requires at a 6. The order making the reference was lower price than that which would result entered on the Court Register on 26 July from the application of the rules of the 1979. common organization of the market in starches. The reason for the imposition of an export levy on maize starch is, according to the recitals of the preamble In accordance with Article 20 of the to that regulation, because the markets in Statute on the Protocol of the Court of non-member countries might be Justice of the EEC, written observations

Furthermore, such disturbances might The Commission considers that goods well be caused by the mere fact that which leave the Community under cheap Community products are offered outward processing arrangements and to the markets of non-member countries enter non-member countries are strictly at prices less than the cost price of the speaking "exported" just as much as products of the latter countries. Under­ goods for which customs clearance is takings which export their goods under obtained directly with a view to their outward processing arrangements are final dispatch to non-member countries. also suppliers to the markets of non- member countries since they are not Assuming that the Council and the obliged to re-import the compensating Commission had intended to exclude the products into the Community. The case of exports under outward Commission adds that the very presence processing arrangements from the on the territory of a non-member general obligation to pay the levy they country of large quantities of goods would have made express provision which may be introduced at any time therefor, as the Commission has fur­ into the distribution network may have thermore done in Regulation No 645/75 effects on the development of the market for cases other than outward processing in that country. arrangements, in particular inward processing arrangements. The Com­ mission emphasizes in this connexion According to the seventh recital of the that the inward processing arrangements, preamble to Regulation N o 1132/74 unlike outward processing arrangements, export levies are also intended to reduce are subject to permanent customs to an appropriate level the advantages, in supervision. the form of a production refund, granted

to Community manufacturers. The The Commission finally mentions the Commission emphasizes in this need to supervise the reimportation of connexion that the exporter, as a compensating products in order to potential supplier on the market in the prevent the system of export levies as a non-member country, enjoys the great whole from being rendered ineffective by advantage of being able to opt on the resort to the outward processing basis of the development of the market arrangements. The absence of either for keeping the goods on the Community provisions providing for market of the non-member country or such supervision shows clearly that the for their re-importation. Where the authors of the regulation certainly compensating product is re-imported intended that the exports effected under there is a dual advantage with regard to control processing arrangements should competition: on the one hand in relation also be subject to the levy. to foreign competitors since he can offer The Commission considers that it is at for sale a cheaper primary product and least doubtful whether the Member on the other in relation to national States intended and were able to make competitors since the processing costs good that lacuna by national provisions in non-member countries must be concerning subsequent collection. considered to be lower. The Commission adds that on the basis of those considerations it has on other The Commission adds that it is proper occasions too regarded it as a matter of for the Community legislature to oppose great importance that on the exportation such competitive advantages which arise of goods under outward processing through the cash benefits of the arrangements the charges to be levied at

Member States. 1976 on the calculation of total or partial relief from import duties under the Finally, if the levy were not collected this outward processing procedure (Official would produce certain secondary effects: Journal 1976, L 153, p. 43). The reason an incentive to make increased use of why there is no mention of export levies processing undertakings operating at a lower cost in non-member countries and in that provision is simply that in 1976 a reduction in supply in the Community they no longer existed.

KNAUľ WESTDEUTSCHE GIPSWERKE v HAUPTZOLLAMT HAMBURG-JONAS

III — Oral procedure burger, Advocate, acting as Agent, presented oral argument. At the hearing on 24 January 1980 the plaintiff in the main action, represented The Advocate General, delivered his by F. Kohler, Tax Adviser, and the opinion at the sitting on 14 February Commission, represented by A. Stock- 1980.

Decision

1 By order of 19 June 1979, which was received at the Court Registry on 26 July 1979, the Bundesfinanzhof submitted to the Court of Justice pursuant to Article 177 of the EEC Treaty the following question for a pre­ liminary ruling:

"Must the word 'export' within Article 7 (2) of Regulation (EEC) N o 1132/74 of the Council of 29 April 1974 on production refunds in the cereals and rice sectors (Official Journal 1974, L 128, p. 24) be interpreted as meaning that an export levy must be imposed on products coming within tariff heading 11.08 A of the Common Customs Tariff even if they were exported in September and October 1974 under outward processing arrangements and were later re-imported as processed goods?"

2 The question was raised in the context of an action involving, on the one hand, a German undertaking which exported special maize starch to Austria under outward processing arrangements which were authorized by the German customs authorities and re-imported the compensating product manufactured from such starch and, on the other, the Hauptzollamt Hamburg-Jonas which, when the goods were exported, charged the levies fixed in the regulations of the Commission adopted on the basis of the provision quoted in the question.

7 Since there is no system of Community control ensuring the re-importation of the products exported under outward processing arrangements or sub- sequent charging of levies, the very presence on the markets in non-member countries of Community goods which are intended to be treated under outward processing arrangements but which are capable of being sold on those markets at a price less than the market price may cause disturbances.

KNAUI1 WESTDEUTSCHE GIPSWERKE v HAUPTZOLLAMT HAMBURG-JONAS

8 Furthermore, the use by the processing industry in non-member countries of cheap products from the Community may adversely affect the processing of domestic products in such non-member countries, which would also constitute a disturbance on the market of such countries.

9 It follows from those considerations that the objectives in view in imposing the export levy thus justify such imposition even if the goods are exported under outward processing arrangements.

10 Moreover, it seems improbable that the Community legislature intended to confer upon the processing industry of non-member countries, which is in competition with the Community industry, the benefit of Community refunds intended to maintain for the Community industry supply prices which are competitive with those of substitute products by reducing prices at the same time to a level below those on the world market.

n Since the outcome of a literal interpretation is thus confirmed by consideration of the objectives and of the scheme of the provision in question it is necessary to reply to the question submitted that the concept of "export" within the meaning of Article 7 (2) of Regulation (EEC) N o 1132/74 of the Council must be interpreted as meaning that any levy which may be introduced in pursuance of that provision must also be imposed on the exportation of the products in question when they are exported under outward processing arrangements and later re-imported as compensating products.

The concept of "export" within the meaning of Article 7 (2) of Regu- lation (EEC) No 1132/74 of the Council of 29 April 1974 on production refunds in the cereals and rice sectors must be interpreted as meaning that any levy which may be introduced in pursuance of that provision must also be imposed on the exportation of the products in question when they are exported under outward processing arrangements and later reimported as compensating products.

Touffait Pescatore Due

Delivered in open court in Luxembourg on 20 March 1980.

A. Van Houtte A. Touffait Registrar President of the Second Chamber

O P I N I O N OF M R ADVOCATE GENERAL REISCHL DELIVERED O N 14 FEBRUARY 1980 '

Mr President, export levies. The decision turns on the Members of the Court, interpretation of the word "export" in Article 7 (2) of Regulation (EEC) No The main action which gave rise to this 1132/74 of the Council of 29 April 1974 request for a preliminary ruling concerns on production refunds in the cereals and the lawfulness of decisions to apply rice sectors (Official Journal 1974, L • — Translated from the German.