C-22/88

1. The case in which a question has been submitted to the Court by the College van Beroep voor het Bedrijfsleven (hereinafter referred to as 'the national court') concerns the validity of Article 13a of Commission Regulation (EEC) No 1687/76, inserted in The refusal concerns a consignment of that Regulation by Regulation (EEC) No skimmed-milk powder from the stocks of 45/84. 1 Regulation (EEC) No 1687/76 the German intervention agency which was contains the Community rules for verifying exported in the course of 1984 by Schenker the use and/or destination of products from (hereinafter referred to as 'the exporter') on intervention. 2 behalf of the Community as food aid in the 3 framework of the world food programme. It is clear from the notice of invitation to tender for the consignment in question 4that the order was placed in the form of a cif contract, which means inter alia that the In the proceedings before the national exporter with which it was placed, namely court, the Inspecteur der Invoerrechten en 5 Schenker, must bear the costs of insurance. Accijnzen (Inspector of Customs and When the goods reached their destination in Excise), Amersfoort (hereinafter referred to the Middle East, it was found that mould as 'the Inspector'), refused, on behalf of the and deterioration in the packaging had defendant (the Minister for Agriculture and made the milk powder unfit for use as food Fisheries), the request which the second aid. It became clear at the hearing that the plaintiff, as the consignor, acting on behalf security for delivery, which had been lodged of the first plaintiff, had submitted for an by the exporter in accordance with Article exemption, under the arrangements for returned goods, from agricultural levy on 3 — Sec Council Regulation (EEC) No 1278/84 of 7 May 1984 the importation of a consignment of laying down the implementing rules for 1984 for Regu- skimmed-milk powder. As will be shown in lation (EEC) No 3331/82 concerning food-aid policy and food-aid management, OJ 1984, L 124, p 1. and greater detail hereinafter, the arrangements Commission Regulation (EEC) No 1354/83 of 17 Mas 1983 laying down general rules for the mobilization and for returned goods are designed to exempt supply of skimmed-milk powder, butter and butteroil as from customs duty goods which originally food aid, OJ 1983, L 142, p 1, as amended by Regulation (EEC) No 1986/83, OJ 1983, L 187, p 29, see in came from the Community and are particular also Commission Regulation (EEC) No 3295/84 of 23 November 1984 on the supply of various lots of skimmed-milk powder as food aid, OJ 1984, L 309, p 16, * Original language Dutch and Annex E thereto 1 — Commission Regulation (EEC) No 45/84 amending Regu- 4 — See Annex E cited in footnote 3 above lation (EEC) No 1687/76 laving down common detailed rules for verifying the use and/or destination of products 5 — Article 18(2) of Regulation (EEC) No 1354/83, from from intervention; OJ 1984. L 7, p 5 Article 18(8) of the same Regulation it is moreover clear 2 — Commission Regulation (EEC) No 1687/76 of 33 lune tbat he must bear the risk of deterioration until the time of 1976, OJ 1976, L 190. p 1 shipment

'. . . certain goods which are imported into the customs territory of the Community to be entered for free circulation may previously have been exported from that territory; The Hauptzollamt Bremen-Nord refused to accept the declaration under the arrangements for returned goods and the Oberfinanzdirektion Bremen rejected the complaint submitted against that refusal by decision of 28 October 1985. The first whereas where, at the time of their plaintiff then shipped the consignment to exportation, such goods satisfied the the Netherlands and placed it in a conditions laid in Articles 9 and 10 of the warehouse belonging to the second plaintiff. Treaty, and where such exportation was not On 17 January 1986 the plaintiffs applied to carried out under outward processing the Netherlands customs authorities to arrangements, the re-importation of such import the consignment under the goods into the Community must be free of arrangements for returned goods. On 5 import duties applicable to them'. January 1987 the Inspecteur van Financien rejected their application and on 8 January 1987, since no security had been lodged, imposed on the second plaintiff an agri­ cultural levy of HFL 848 374.80. An action challenging those two decisions was brought Those arrangements for 'returned goods' before the national court. are designed to abolish import levies of all kinds where goods originating in the customs territory of the Community are 6 — It is not clear whether the security was released on the basis of Article 26(2) (proof that the conditions on use re-imported into the Community. An and / or destination have been satisfied) or on the basis of Article 26(9) (force majeure) of Regulation (EEC) No exception is made to that principle, 1354/83. The answer to this question is in any event however, as is clear from the fifth recital in irrelevant for the purposes of the question of law at issue. It is clear from Article 16(3) of the same Regulation that the preamble to the Regulation: the rights and obligations arising from the award are not transferable. This means that the legal relationship between Schenker and the German intervention agency was not 7 — Council Regulation (EEC) No 75-1/76 of 25 March 1976, transferred to Vreugdenhil. OJ 1976, L 89, p 1

The policy objective expressed in the first half of the fifth recital (exclusion of Thus Article 13a(1) amplifies Article 2(2) of exemption) was achieved in Article 2(1 )(b) Council Regulation (EEC) No 754/76. As of basic Regulation (EEC) No 754/76 and already explained, Article 2(2) lays down the objective expressed in the second half the derogations from the principle of (permitted derogations) was achieved in non-exemption contained in Article 2(1): it Article 2(2) of the Regulation. The text of determines in which cases and subject to Article 2 as applicable at the material time is what condition goods which are excluded set out in the Report for the Hearing (in from the category of 'returned goods' in section 1). Article 2(1 )(b) because they 'were the subject of customs export formalities with a view to obtaining refunds and other amounts granted on exportation within the framework of the common agricultural policy' may none the less be considered to be returned goods. This exceptional recog­ 3. At the material time the aforementioned nition of the goods as returned goods is Commission Regulation (EEC) No 1687/76 subject to the condition that 'it is established of 30 June 1976 contained the provisions on that the amounts granted have been repaid verification with regard to products from or that all measures have been taken . . . for intervention stocks. As I have already such sums to be withheld'. It is precisely this mentioned, it was by means of an amending condition which is amplified in Article regulation, namely Commission Regulation 13a(1), which states that the security (EEC) No 45/84 of 6 January 1984, that designed to guarantee that goods from the contested Article 13a was inserted in intervention reach their destination must be Regulation (EEC) No 1687/76. Article 13a declared forfeit, or that if it has already is made up of several parts. Article 13a(1) been released, an amount equal to the provides as follows: security must be paid.

The effect of the presumption contained in Article 13a(2) is as follows: where goods from intervention stocks are reimported into In the present case in which skimmed-milk the Community, it is assumed first of all powder has been exported as food aid, the that the condition laid down in Article situation is as follows. In accordance with 2(1)(b) of Regulation (EEC) No 754/76 is Article 4(1) Regulation (EEC) No 1354/83, satisfied, that is to say it is assumed that cited in footnote 3, which lays down general when the goods left the Community the rules for the mobilization and supply of customs export formalities with a view to skimmed-milk powder and similar products obtaining refunds (or other agricultural as food aid, the exporter was required to amounts) were completed, and secondly lodge a delivery security equal to the inter­ Article 13a(1) is applicable, that is to say the vention price of the product plus 10%. This security lodged (and not released) or if the security lodged by the exporter was,

VREUGDENHIL AND ANOTHER * MINISTER VAN LANDBOUW EN VISSERIJ

however, contrary to the rules applicable in (b) goods: other export situations, not transferable; this is clear from Article 16(3) of Regulation (EEC) No 1354/83. 8Under Article 13a(2), a fresh security of the same amount therefore had to be lodged by those wishing to return the products from intervention to the Community, namely the applicants, and this they do not do; consequently, an agri­ or) cultural levy was imposed.

for which a financial advantage other than such refunds or other amounts has been granted within 4. Subsequent to the facts which gave rise the framework of the common to the action before the national court, the agricultural policy, with the Council, by Regulation (EEC) No 1147/86 requirement that the said goods be of 17 April 1986, 9 amended Article 2 of exported.' Regulation (EEC) No 754/76 on returned goods by adding, in Article 2(1 )(b) a more general exclusion clause. Since both the plaintiffs and the Commission derive a line of argument from this addition, it is worth The introductory section of Article 2(2) was comparing the amended provision with the amended as follows: contested Article 13a.

5. In order to give a full chronological account I would also point out that, in spite Secondly, the fact that the Council Regu­ of the aforesaid amendment to Article 2 of lation amends Article 2(1)(b) and Article Council Regulation (EEC) No 754/76, the 2(2) means that Article 2(2) also applies, Commission nevertheless reproduced Article that is to say that if the financial advantages 13a of its implementing Regulation (EEC) paid are reimbursed the status of returned No 1687/76 in its entirety in Article 19 of goods may be obtained for goods which fall its new Regulation (EEC) No 569/88 of 16 3 into one of the three categories defined in February 1988. 1 As already stated, the new paragraph 2, for example because they are Article 19 is, in the Commission's view, a defective. Strictly speaking, the way in rule implementing the amended Article 2 of which repayment would be made under the Regulation (EEC) No 754/76. new arrangements introduced by the Council Regulation is of no importance in this case, which pre-dates that Regulation. Nevertheless, the Court asked the Commission a question in this regard, and The arguments of the parties the Commission informed the Court that in its view Article 13a adopted by the Commission (which has since been reproduced in its entirety in a new Article 19; see paragraph 5 below) is still the 6. Before the national court the plaintiffs implementing provision. Under that im­ put forward four arguments, only one of which has been submitted to the Court: it 10 — These are rules which, instead of providing for export concerns the Commission's lack of refunds, give the right to importspecified quantities of the same product free of import duties. These rules are competence to insert the contested Article regularly applied in the heef and veal sector and were for a long time also applied in the fats and oils sector. 13a into Commission Regulation (EEC) No 11 — Article 7 of Commission Regulation (EEC) No 2437/87 of 1687/76 by means of Regulation (EEC) No 11 August 1987 providing for the grant of private storage 45/84. I would refer to the Report for the aid fixed at a standard rate in advance in respect of carcasses, half-carcasses, hindquarters and forequarters Hearing for a summary of the observations from adult male bovine animals; OJ 1987, L 225, p. 13. of the parties. In this Opinion I shall confine 12 — Sec Commission Regulation (EEC) No 3916/88 of 15 December 1988 extending the period of validity of the myself to the basic reasoning of the measures provided for by Regulation (EEC) No 3191/80 on transitional measures concerning non-recovery of the variable slaughter premium for sheepmeat and goatmeat 13 — Regulation (EEC) No 569/88 laying down common products exported from the Community; OJ 1988, L 347, detailed rules for verifying the use and/or destination of n. 57. goods from intervention; OJ 1988, L 55, p. 1

The plaintiffs consider that the question of contained in Article 2(1 )(b) of basic Regu­ competence submitted to the Court should lation (EEC) No 754/76. be regarded as a conflict between Regu­ lation (EEC) No 754/76, a Council Regu­ lation adopted on the basis of Articles 28, 43 and 235 of the Treaty, after consultation In their observations, the plaintiffs refer to of the European Parliament, and Regulation the judgments of the Court, and in x (EEC) No 45/84, a Commission Regulation particular to its judgments in Tradax * and I5 which as such could not derogate from the Compagnie Continentale. They define former Regulation. their criticism more precisely by stating that Article 15(2) of Council Regulation (EEC) No 754/76 expressly confers on the Commission power to adopt the provisions necessary for the application of Article 2(2) in particular. Article 15(2) provides that this power is to be exercised according to the The plaintiffs claim that, by adding Article 'Committee on Duty-Free Arrangements' 13a to Commission Regulation (EEC) No I6 procedure. The Commission used this 1687/76 on verifying the use and / or desti­ power in Regulation (EEC) No 2945/76 of nation of products from intervention, the ,7 26 November 1976. The fact that this Commission usurped the powers of the Council to amend basic Regulation (EEC) 14 _ Judgment of 10 March 1971 in Case 38/70 Tradax v No 754/76 on the customs treatment Einfuhr und Vorratsstelle Getreide [1971] ECR 145, chiefly applicable to returned goods. In their view, at paragraph 10, second sentence. 15 — Judgment of 10 March 1971 in Case 58/70 Compagnie the sentence Continentale v Hoofdproduktschap voor Akkerbouwpro- dukten [1971] ECR 163, paragraph 15. 16 — This Committee was set up by Article 7 of Regulation (EEC) No 1798/75 of the Council of 10 July 1975 on the importation free of Common Customs Tariff duties of educational, scientific and cultural materials; OJ 1975, L 184, p. 1. Article 9 of that Regulation prescribes the procedure: the Committee gives an opinion on a draft submitted by the Commission. If the proposed measures 'Where products . . . leave the geographical conform with the opinion of the Committee acting by a weighted majority, the Commission may adopt the text. If territory of the Community without the the proposed measures do not conform with the opinion of customs export formalities for obtaining a the Committee, the Commission forthwith submits a proposal to the Council, which acts by a qualified majority. refund being completed, those formalities If after three months the Council has not acted, the proposed measures are adopted by the Commission. shall, for the purposes of the application of 17 — Regulation (EEC) No 2945/76 laying down provisions for Regulation (EEC) No 754/76, be regarded the implementation of Council Regulation (EEC) No as having been completed and the provisions 754/76 on the customs treatment applicable to goods returned to the customs territory of the Communitv; OJ of paragraph 1 shall apply' 1976, L 335, p. 1.

procedure was not followed when Regu­ the scope of the other autonomous power lation (EEC) No 45/84 was adopted and vice versa. constitutes a breach of an essential procedural requirement which renders the Regulation void. Since the Commission was authorized on the basis of its power in agricultural matters, it was not bound to follow the 'Committee on Duty-Free Arrangements' procedure since that procedure concerns the adoption 7. The Commission contends that it had of detailed rules for implementing customs power to adopt the Regulation and states rules. that in regard to the common agricultural policy it has a wide implementing power, as was recognized by the Court in the Rau 8 case, 1 and that in this case it adopted a measure to prevent abuse or speculation. It Assessment of the arguments concerning stresses the fact that Commission Regu­ competence lation No 1687/76, which was amended by Commission Regulation (EEC) No 45/84, contains general rules for controlling agri­ cultural products from intervention in the 8. The first question which must be framework of the various organizations of answered is whether the judgments of the the market. The wide implementing power Court relied upon by the parties are in fact enjoyed by the Commission with regard to of use in this case. The applicants rely upon organizations of the market is therefore the the judgment in Tradax, in which the Court legal basis for the contested Article 13a. stated in the third sentence of paragraph 10 that an implementing regulation not directly based on Article 43(2) of the Treaty could not derogate from the basic regulation to which it was subordinate. The Commission relies upon the judgments in Rau and The Commission then states that it does not Franken in which the Court recognized that agree with the way in which the question of it had a wide implementing power for the law is formulated as a conflict between implementation of the basic regulation, that Council regulations which take precedence, is to say for the implementation of the on the one hand, and Commission regu­ Council Regulation applicable to a certain lations, on the other. It acted within the agricultural sector which introduces a ambit of its power in respect of the organ­ common organization of the market for that ization of the markets. The matter is sector. therefore rather more than a question of the delimitation of autonomous powers. In the 9 exercise of such powers, 1 it is inevitable that rules adopted pursuant to an The present case concerns the relationship autonomous power will have an impact on between Council Regulation (EEC) No 754/76 on the customs treatment applicable 18 — Judgment of 11 March 1987 in Joined Cases 279, 280, 285 to returned goods and Commission Regu­ and 286/84 Ran v Commission [1987] ECR 1069, para­ graphs 14 and 15. lation (EEC) No 1687/76 on the verifi­ 19 — Judgment of 15 May 1984 in Case 121/83 Zuckerfabrik cation of the use and / or destination of Franken v Hailptzollamt Würzburg [1984] ECR 2039, paragraph 13. products from intervention. Council Regu-

The abuses which the Commission had in mind in this case are stated in the recital to 9. The question of competence which has the contested amending regulation, Regu­ arisen is essentially a question of the lation (EEC) No 45/84: precedence which must be given to two objectives. On the one hand, there is the objective of combating and preventing any abuse in order that Community funds are used as responsibly as possible in an area as sensitive as agriculture, and more especially as regards goods from intervention. On the '(second recital) . . . whereas products from other hand, there is the objective of treating intervention intended for export and undertakings fairly on the reimportation of exported, whether with or without a refund, should be prevented from being reimported 20 — See, for example, Article 11(5) and 26(3) of Regulation No as Community products . . . 136/66/EEC of the Council on oils and fats, cued in the preamble to Regulation (EEC) No 1687/76 and, for the milk-products sector, Anicie 6(7) and Article 7(5) of Regu- 21 — See the ludgmcnt of 14 February 1989 in Case 13/88 lation (EEC) No 804/68, OJ, English Special Edition 1968 Knoeckel v Hauplzollamt Landau [1989] ECR 337, in (1), p 176 particular paragraph 28.

OPINION OF MR VAN GERVEN — CASE 22/88

(third recital) whereas the selling price of goods for which refunds were granted, had products from intervention may be below been thinking of the quod plerumque fit and the market price; whereas the difference that, as soon as it was aware that the between the two prices may be greater than arrangements for returned goods were used the import duties; whereas this situation for goods from intervention stocks, it was could give rise to abuse ... bound to prohibit such a practice as an improper use of the rules and speculation to the detriment of the Community.

VREUGDENHIL AND ANOTHER v MINISTER VAN LANDBOUW EN VISSERIJ

OPINION OF MR VAN GERVEN —CASE 22/88

after the amendment introduced by Council 13. In paragraph 8 of its judgment of 23 Regulation (EEC) No 1147/86. February 1983 in Fromançais SA v Forma, the Court stated as follows:

'In order to establish whether a provision of The applicants' complaint of dispropor- Community law is consonant with the tionality is precisely that the amount principle of proportionality it is necessary to confiscated, which is equal to 110% of the establish, in the first place, whether the intervention price of any given product, in means it employs to achieve its aim this case skimmed-milk powder (see correspond to the importance of the aim paragraph 3 in fine above) is far more than and, in the second place, whether they are the actual value of the product, and in this necessary for its achievement'. case, according to the applicants, 2.79 times higher than the value of the damaged consignment. The applicants consider that this is a disproportionately severe measure for preventing an improper use to be made As I have already stated (see paragraph 10), of any difference between the price at which the aim is to prevent goods from inter­ goods from intervention stocks are made vention from disturbing the Community available and the market price. When the market by offering subsidized competition Court put a written question to the with the Community producers and Commission in this regard, it replied that increasing the supply on the market and 'this is the most convenient solution from an thus necessitating fresh intervention. The administrative point of view. It avoids the means employed, namely the requirement of necessity of making a comparison between an amount replacing the release security of the purchase price and the market price, the exporter, seems to me to correspond to especially when the market price may not the importance of that objective (see always be precisely ascertained'. paragraph 11 above).

Unlike the other cases in which the Coun simplicity. The facts in the present case has given judgment, the plaintiff in this support the Commission's statement that case, Vreugdenhil BV, not being the when the rules applicable to security are exporter, did not provide the original adopted no account may be taken of security but took upon itself the commercial particular circumstances such as the resale risk of purchasing damaged goods from of goods with the contract terms unknown intervention stocks and attempting to to third parties. Secondly, and more reimport them into the Community. This especially, it is clear from the judgments of factor has the effect of severing the link the Court — in which, in order to assess with the original security lodged by the whether the forfeiture of the entire security 24 exporter. This is of great importance in is compatible with the principle of propor­ the present case: whereas the person who tionality, a distinction is drawn between supplied the original security could perhaps primary obligations and secondary obli­ 2b claim a certain entitlement to reimport the gations — does not lead to the conclusion goods on the basis of his legal connection here that the rules adopted on the provision with the Community or the German inter­ of security with regard to goods from inter­ vention agency, or both, or at least to the vention are unnecessary to attain the desired release of the security which he had lodged, aim. It is a case of imposing a rule to attain that does not seem to be the case of the first a primary aim. In this instance, that aim is applicant, who could in any event have not, however, as in the majority of cases covered itself contractually in the basic brought before the Court, to guarantee that transaction against the risk of not being able goods exported from the Community to reimport the goods (and may even have actually leave the Community and reach 25 done so). their destination but to discourage the reim­ portation of goods previously held in inter­ vention. In the Fromançais case cited above, the Court accepted (albeit with regard to the first situation which I have referred to above but nonetheless in general terms) that the forfeiture of the whole security, as a means of preventing speculation, was not 27 disproportionate. Thus where, as in this case, it is a question of discouraging a trans­ 14. Against this background two factors action considered undesirable from the stand out. In the first place, it becomes Community point of view, the confiscation clearer what the Commission has in mind when it refers to grounds of administrative

OPINION OF MR VAN GERVEN — CASE 22/88

of a security equal to 110% of the inter­ to be imposed, it was too late for them to vention price of the product in question do anything but reimport the goods into the cannot be considered inappropriate. Community, partly owing to the delay on the part of the authorities.

Nevertheless, in the course of the procedure, certain facts have come to light It seems to me that these are factors which which do not, however, concern the validity must be assessed by the national court in the of Article 13a of Commission Regulation context of the arguments put to it by the (EEC) No 1687/76. Thus, the plaintiffs plaintiffs (see paragraph 6 above) that their state that they were told by the authorities legitimate expectations were not fulfilled. that they did not want the damaged bags Those particular circumstances of the case, marked 'Food aid — gift of the EEC' to of which the Court is in any event not suffi­ continue to circulate within the Community. ciently aware, do not, however, affect the In addition, the plaintiffs state that by the general appraisal of the validity of Article time they knew that an agricultural levy was 13a of Regulation (EEC) No 1687/76.

Conclusion

15. On the basis of the considerations set out above I propose that the Court should reply to the question put to it by the national court as follows:

Consideration of the preliminary question has disclosed no factor of such a kind as to cast doubt on the validity of Article 13a of Commission Regulation ( EEC ) No 1687 / 76 , as inserted therein by Commission Regulation ( EEC ) No 45 / 84 .