C-167/82

JUDGMENT OF 24. 3. 1983 — CASE 167/82

In Case 167/82

R E F E R E N C E to the C o u r t u n d e r Article 177 of the E E C T r e a t y by the Finanzgericht (Finance C o u r t ) H a m b u r g for a preliminary ruling in the action pending before t h a t c o u r t between

NORDGETREIDE G M B H & C o . K G , a milling c o m p a n y having its registered office in Lübeck,

and

HAUPTZOLLAMT (Principal C u s t o m s Office) HAMBURG-JONAS

Facts and Issues

The facts of the case, the course of I — F a c t s and w r i t t e n p r o c e d u r e the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized Regulation (EEC) No 2727/75 of the as follows: Council of 29 October 1975 on the

NORDGETREIDE v HAUPTZOLLAMT HAMBURG-JONAS

common organization of the market in wheat, to the incidence on their prime cereals (Official Journal 1975, L 281, cost of the levies on those basic p. 1) creates a single price system for products; cereals in the Community. The system is achieved by the annual fixing of a target price in respect of the principal products which is valid throughout the Community, of one or more basic or derived intervention prices at which the Is increased, where appropriate, for relevant national agencies are obliged to processed products containing both buy in cereals which are offered to them, cereals other than durum wheat and and of a threshold price to which the other products, by the amount of the price of imponed products is equated by incidence on their prime cost of the means of a variable import levy. levies or customs duties charged on those other products;

Regulation (EEC) No 2727/75 also introduces a single trading system at the Is fixed, for products which do not external frontiers of the Community. contain cereals other than durum wheat, The system includes import levies and with reference to market conditions for export refunds, which serve to stabilize the cereal products which are in the Community market, in particular by competition with them. preventing price fluctuations on the world market from affecting prices ruling within the Community. The levy charged on imports from non-member countries and the refund paid on exports to those countries are designed to cover (b) The fixed component is designed to the difference between the prices ruling protect the Community's processing outside and within the Community. The industry. levy is charged and the refund is paid both on cereals and on products processed from cereals.

When the refund is being fixed, particular account is to be taken of the As regards the levy charged on the need to establish a balance between the importation of products processed from use of Community basic products in the cereals originating from non-member manufacture of processed goods for countries, the preamble to Regulation export to non-member countries and the No 2744/75 states that the variable usé of products brought in from non- component of the levy must correspond member countries under inward to the incidence on the prime costs of processing arrangements (third sub- processed products of the levies on basic paragraph of Article 16 (2)). products and that that incidence may be calculated on the basis of the average of the levies applicable during a re- The amount of the export refunds is to presentative period to the quantity of the be that applicable on the day of expor- basic product deemed necessary for the tation (Article 16 (3)). However, the manufacture of one unit of the processed refund applicable on the day on which product. application for the licence is lodged, adjusted for the threshold price in force during the month of exportation, is to be Thus, ' Article 2 (1) of the regulation applied to an export to be effected provides that the variable component of during the period of validity of the the levy during the course of a given licence if the applicant so requests when month is to be equal to the average of applying for the licence (first and third the levies applicable for the first 25 days subparagraphs of Article 16 (4)). of the month preceding that of impor- tation per tonne of the basic product or products (listed in column 3 of Annex I), Refunds are fixed at regular intervals in multiplied by the relevant coefficient for accordance with the "Management each basic product (which appears Committee" procedure (fourth sub- against the product in question in paragraph of Article 16 (2)). column 4 of Annex I).

effected is to be determined for each of obtained from one and the same pro- the basic products in question in cess and one and the same product; accordance with the Management Committee procedure. (d) outlets and conditions of sale for processed products on the world The fixed component of the levy, which market." is designed to protect the processing industry, is determined on the basis of the most representative processing costs. By virtue of the first paragraph of Article Pursuant to Article 3 and Annex I of the 7 of the regulation, the refund in force regulation, the fixed component is stated on the day on which the application for in terms of units of account per tonne. a licence is lodged is to be applied to a transaction to be carried out during the period of validity of the licence, at the As regards the refund paid on exports to request of the applicant and that request non-member countries of products is to be lodged at the same time as the processed from cereals, the preamble to application for a licence. Regulation (EEC) No 2744/75 states that the object of the refund should be to cover the difference between the prices The second paragraph provides that, in of products within the Community and such a case, the refund is to be adjusted on the world market and that, for that by reference to the threshold price in purpose, criteria should be established force during the month of exportation for determining the refund essentially on for the basic product or products. The the basis of prices of the basic products adjustment is to be effected by increasing within and outside the Community and or reducing the refund by the difference the outlets and conditions for the sale of between the threshold prices valid for processed products on the world market. one tonne of the basic product during, respectively, the month in which the licence was applied for and the month of Accordingly, Article 6 (1) of the Regu- exportation, multiplied by the lation provides as follows: "processing" coefficients laid down for the various processed products (which appear against the processed product in "The refund which may be granted on question in column 4 of Annex I to the processed products shall be determined regulation). with particular reference to :

Rate of refund under By a number of decisions adopted during Regulation No 851/79 163.55 ECU September and October 1979, at Nord- getreide's request, the Hauptzollamt Difference between the Hamburg-Jonas fixed the refunds threshold prices for applicable to the exports in question. barley in May (190.28 ECU) and August 1979 (178.90 ECU) ' = 11.38 The Customs Office adopted as the basis ECU, multiplied by the for its calculations the amounts of the processing coefficient (2) refunds indicated in Commission Regu- fixed in Annex I to lations Nos 851/79 of 30 April 1979 and Regulation No 2744/75 22.76 ECU 1309/79 of 29 June 1979, fixing the export refunds on products processed Refund adjusted in from cereals and rice (Official Journal accordance with the .1979, L 108, p. 11 and L 162, p. 39). second paragraph of Those regulations refer in particular to Article 7 of Regulation Article 6 of Regulation N o 2744/75, No 2744/75 140.79 ECU which defines the specific criteria to be taken into account when the export refund on products processed from (b) The calculation for the September cereals is being calculated. In the case of 1979 exports is as follows: flaked barley within tariff subheading 11.02 E I (b) 1 (aa), Regulation No Rate of refund under 851/79 fixes the refund for May 1979 at Regulation No 1309/79 128.01 ECU 163.55 European Currency Units (ECU) per tonne, whilst Regulation No 1309/79 fixes the refund for July 1979 at Difference between the 128.01 ECU per tonne. threshold prices for barley in July (192.04 ECU) and September Since the present case relates to refunds 1979 (180.69 ECU) = fixed in advance, the Hauptzollamt made 11.35 ECU, multiplied the adjustment, pursuant to the second by the processing paragraph of Article 7 of Regulation No coefficient (2) fixed by 2744/75, by reference to the threshold Annex I to Regulation price in force during the month of expor- No 2744/75 22.70 ECU tation for the basic product, by reducing the refund by the difference between the Refund adjusted in threshold prices valid for one tonne of accordance with the the basic product during, respectively, second paragraph of the month in which the licence was Article 7 of Regulation applied for and the month of expor- No 2744/75 105.31 ECU

On 3 and 10 October 1979, Nord- The order of the Finanzgericht Hamburg getreide lodged complaints with the was received at the Court Registry on Hauptzollamt against the decisions fixing 11 June 1982. the refunds. The complaints were rejected by decisions of 10 and 6 Pursuant to Article 20 of the Protocol December 1979, against which Nord- on the Statute of the Court of Justice of getreide commenced proceedings before the EEC, written observations were the Finanzgericht Hamburg on 2 January submitted on 21 July 1982 by the 1980. Commission of the European Com- munities, represented by its Legal Adviser, Peter Karpenstein. Nordgetreide did not dispute that the Hauptzollamt had properly applied Commission Regulation Nos 851/79 and Upon hearing the report of the Judge- 1309/79 but alleged that those regu- Rapporteur and the views of the lations did not correctly determine the Advocate General, the Court decided to refund applicable to flaked barley. For open the oral procedure without any determination of the refund, they applied preparatory inquiry. However, the Court a coefficient of 1.5 to the levy on barley requested the Commission to reply in — the basic product — whereas Regu- writing to one question. That request lation No 2744/75 of the Council was complied with within the prescribed specifies a processing coefficient of 2. period. The same coefficient should be applied in both cases. The Court also requested the Commission to have its Agent accompanied at the hearing by an expert. By order of its Fourth Senate dated 29 April 1982, the Finanzgericht Hamburg By order of 17 November 1982, made decided, pursuant to Article 177 of the pursuant to Article 95 (1) and (2) of the EEC Treaty, to stay the proceedings Rules of Procedure, the Court assigned until the Court of Justice of the the case to the Second Chamber. European Communities had given a pre- liminary ruling on the following questions : Considering that the case related to the interpretation of Regulation No 2744/75 of the Council, the Court requested the Council to arrange to be respresented at 1. Are the refunds fixed in annexes to the hearing. Commission Regulations (EEC) No 851/79 of 30 April 1979 and No 1309/79 of 29 June 1979 in respect of flaked barley falling within tariff II — W r i t t e n o b s e r v a t i o n s sub- heading 11.02 E I (b) 1 of the mitted to the C o u r t Common Customs Tariff valid or does the fixing thereof contravene the provisions of Regulation (EEC) No The Commission stresses that the court 2744/75 of the Council of 29 October making the reference does not dispute 1975? the applicability of the coefficient provided for in the second paragraph of Article 7 of Regulation No 2744/75 for 2. What are the legal consequences in the adjustment of export refunds fixed in the event of the fixing of the refunds advance. Its doubts relate solely to the being found to be invalid? method of calculation adopted by Regu-

lations Nos 851/79 and 1309/79 for (b) It is apparent from Article 16 of determination of the refund applicable to Regulation No 2727/75 and from Article flaked barley. 6 of Regulation No 2744/75 that, for the fixing of export refunds, the Commission is required to have regard to very few criteria, some of which are described in very vague terms. The third subpara- First question graph of Article 16 (2) of Regulation No 2727/75, in particular, indicates that the primary consideration is the market situation at the time in question and that (a) In the context of the common the fixing of export refunds is by no organization of the market in cereals, means an automatic procedure.

Those criteria serve only as Market. As regards the fixing of export guidelines, as is demonstrated by the use refunds, however, Article 16 of Regu- of the expression "with particular lation No 2727/75 provides that the reference to". Moreover, Article 6 itself difference between quotations or prices provides for a large number of cases in on the world market and prices in the which it is possible to depart from the Community may be covered by an export criteria set out in Article 6 (1), or to refund, and the opening words of Article suplement them. Even if subparagraphs

NORDGETREIDE v HAUPTZOLLAMT HAMBURG-JONAS

flaked barley every month, it takes subparagraphs (b) and (c) of Article 6 (1) account of the criteria in Article 6 (1) of of Regulation No 2744/75. Regulation No 2744/75 as follows:

JUDGMENT OF 24. 3. 1983 — CASE 167/82

of the monthly refunds on flaked barley indeed less favourable than the results is designed solely to preclude the obtained by the application of Regu- possibility of duplication. lations Nos 851/79 and 1309/79.

NORDGETREIDE v HAUPTZOLLAMT HAMBURG-JONAS

prescribed periods, the nullity of should likewise be used for calculation of Commission Regulations (EEC) No the refund itself under Article 6 (1) 851/79 and (EEC) No 1309/79 does not thereof. Uniform application of the same entail the right to contest - the coefficient would not run counter to the Commission's fixing of export refunds prohibition of duplication, which — the for such processed products as regards plaintiff alleged — did not relate to the period prior to the judgment of the processing coefficients. Furthermore, the Court. Commission's claims regarding the various by-products yielded by the manufacture of flaked barley were incorrect. Ill — Oral procedure

JUDGMENT OF 24. 3. 1983 — CASE 167/82

30 April 1979 fixing the export refunds on products processed from cereals and rice (Official Journal 1979, L 108, p. 11), and of Commission Regu- lation (EEC) No 1309/79 of 29 June 1979 on the same subject (Official Journal 1979, L 162, p. 39), which are based on Regulation (EEC) N o 2744/75 of the Council of 29 October 1975 on the import and export system for products processed from cereals and from rice (Official Journal 1975, L 281, p. 65).

2 It appears from the file on the case that when, in August and September 1979, the plaintiff in the main proceedings exported some flaked barley falling within tariff subheading 11.02 E I (b) 1 (aa) the Hauptzollamt [Principal Customs Office] Hamburg-Jonas fixed the refunds in accordance with the rates shown in the annexes to Regulations N o 851/79 and N o 1309/79, deducting the adjustment provided for by the second paragraph of Article 7 of Regulation No 2744/75. It is not contested that the calculation made by the Hauptzollamt is consistent with the regulations cited.

3 None the less, the plaintiff contests the method of calculation by which the rates set forth in the annexes to the two Commission regulations cited above are arrived at. The analysis of the calculation of the refunds undertaken by the plaintiff and the Finanzgericht does indeed disclose that, whilst the adjustment was calculated on the basis of a coefficient of 2, as laid down by Article 7 of Regualtion 2744/75, the refund itself, on the other hand, was determined on the basis of a coefficient of 1.5.

2. What are the legal consequences in the event of the fixing of the refunds being found to be invalid?

7 Pursuant to Article 2 of Regulation No 2744/75, the variable component of the levy charged on products processed from cereals is determined with reference to the levy applicable to the corresponding basic products, multiplied by the coefficients appearing in Annex I to the regulation.

8 In the case of the product in question, namely flaked barley,, the applicable coefficient is 2. It emerges from the explanations furnished by the Council that the coefficient is based on experience, dating back to the time when the common market in cereals was first organized, in view of the fact that the production of one tonne of flaked barley calls for the utilization of two tonnes of the basic product.

9 According to the sixth recital in the preamble to Regulation N o 2744/75, the object of the refund is to cover the difference between the prices of products within the Community and those on the world market. It adds that "for that purpose, criteria should be established for determining the refund essentially on the basis of prices of the basic products within and outside the Community and the outlets and conditions for the sale of processed products on the world market".

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io To that end, Article 6 (1) of Regulation No 2744/75 provides as follows:

1 2 In the context of the common organization of the cereals market, refunds are determined by the Commission in accordance with the "Management Committee" procedure. The regulations which the plaintiff now challenges were adopted under that procedure.

o Contrary to the argument put forward by the plaintiff, the computation of the refunds on the basis of the levies governing the basic product is not an automatic calculation process. Article 6 of Regulation N o 2744/75 implies a discretionary power, which has been properly delegated by the Council to the Commission.

u Whilst it is true that subparagraphs (a) and (b) .of Article 6 (1) refer to specific values, namely the prices and the quantities of the basic products used for calculation of the variable component of the levy, the same does not

NORDGETREIDE v HAUPTZOLLAMT HAMBURG-JONAS

apply to subparagraphs (c) and (d), which allow the Commission a dis- cretionary power in two respects :

Under subparagraph (c), regarding the elimination of any duplication of refunds applicable to various products obtained from one and the same process, which necessarily implies an alteration of the processing coefficient adopted by Regulation N o 2744/75; and

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applied to the adjustment, whereas it permits that same coefficient to be amended for the purpose of fixing the refund itself, in the light of the factors referred to in Article 6. It therefore appears that the fixing procedure criticized by the plaintiff merely constitutes the correct application by the Commission and the national authorities of the criteria set forth in Regu- lation N o 2744/75 of the Council.

is Thus, the answer to be given must be that consideration of the first question raised by the Finanzgericht has disclosed no factor of such a kind as to affect the validity of Commission Regulations Nos 851/79 or 1309/79.

i9 In view of the above answer the second question is devoid of purpose.

Costs

20 The costs incurred by the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. 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, the decision on costs is a matter for that court.

Pescatore Due Bahlmann

Delivered in open court in L u x e m b o u r g on 24 M a r c h 1983.

For the Registrar H. A. Rühi P. P e s c a t o r e Principal Administrator President of the Second Chamber

OPINION OF MRS ADVOCATE GENERAL ROZÈS DELIVERED ON 10 MARCH 1983 '

Mr President, exported to Poland between 1 August Members of the Court, 1979 (the commencement of the marketing year 1979-1980) and 31 August 1979 1 400 tonnes and between 5 The Court is requested by the Finanz- and 26 September 1979 1 000 tonnes, of gericht [Finance Court] Hamburg to give flaked barley classified under Common a preliminary ruling on the validity of Customs Tariff subheading 11.02 E I (b) certain provisions of Commission Regu- 1 (aa) (flaked barley of an ash content, lations Nos 851/79 of 30 April 1979 and referred to dry matter, not exceeding 1309/79 of 29 June 1979, fixing the 1% by weight and of a crude fibre export refunds on products processed content, referred to dry matter, not from cereals and rice. exceeding 0.9% by weight).

I — The facts are as follows: