C-27/94

NETHERLANDS v COMMISSION

J U D G M E N T O F T H E C O U R T (Sixth Chamber) 1 October 1998 *

In Case C-27/94,

Kingdom of the Netherlands, represented by J. W. de Zwaan and J. S. van den Oosterkamp, Assistant Legal Advisers at the Ministry of Foreign Affairs, acting as Agents, with an address for service in Luxembourg at the Netherlands Embassy, 5 Rue C. M. Spoo,

applicant,

v

T H E C O U R T (Sixth Chamber),

composed of: H . Ragnemalm, President of the Chamber, R. Schintgen, G. F. Mancini (Rapporteur), P. J. G. Kapteyn and G. Hirsch, Judges,

Advocate General: S. Alber, Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 19 May 1998,

gives the following

3 Article 8(1) of that regulation requires Member States to satisfy themselves that transactions financed by the Fund are actually carried out and are executed cor- rectly, and to prevent and deal with irregularities. Under Article 8(2), the financial consequences of irregularities or negligence attributable to administrative authori- ties or other bodies of the Member States are not to be borne by the Community.

4 Article 3 of Commission Regulation (EEC) N o 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ 1987 L 351, p . 1) provides:

' 1 . The day of export means the date on which the customs authority accepts the export declaration in which it is stated that a refund will be applied for.

2. The date of acceptance of the export declaration shall determine:

(a) the rate of the refund where the refund is not fixed in advance;

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(b) the net mass of the products or, where applicable, the unit of measurement to be taken into account in calculating the refund; and,

(c) in so far as is necessary for calculating the refund, particulars of the composi- tion of the products or the relevant reference.

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NETHERLANDS v COMMISSION

6. At the time of such acceptance, or of such equivalent act, the products shall be placed under customs control until they leave the customs territory of the Com- munity.'

5 Article 4(1) of Regulation N o 3665/87 provides that, without prejudice to the pro- visions of Articles 5 and 16, the refund is to be paid only upon proof being fur- nished that the products for which the export declaration was accepted have, within 60 days from the date of such acceptance of the export declaration, left the customs territory of the Community in the unaltered state.

JUDGMENT OF 1. 10. 1998 — CASE C-27/94

— a document which shows that the product has been presented at a customs office in a non-member country or one or more of the documents referred to in Article 18 (1), (2) and (4);

(b) where Articles 34, 42 or 38 are applied: confirmation by the customs office responsible for checking the destination in question that the conditions for endorsement of the control copy concerned by the said office have been ful- filled.'

The dispute

8 In 1991 the Commission carried out audits of the body appointed by the Nether- lands Minister for Agriculture, Nature Management and Fisheries to make pay- ments, namely the Hoofproduktschap voor Akkerbouwprodukten (Central Board for Agricultural Products).

9 In its Report N o VI/002020 of 14 January 1992, the Commission noted that, in relation to the export of 18 250 230 kg of barley to Russia (file B 867163), the export declaration was accepted on 27 November 1989 by the Netherlands customs authorities in Terneuzen even though the barley had left the territory of the Com- munity on board the Kapitan Stankov on 25 November 1989. The Commission contends that the delay led to uncertainty as to whether the goods had been declared for export within the prescribed time-limit and whether the Netherlands customs authorities had been in a position to inspect them.

13 In response to the Commission's request for further information, the Netherlands authorities reiterated, in a letter dated 14 December 1992, the points they had made as to the movements of the Kapitan Stankov and undertook to submit, as evidence, an extract from the register of the Terneuzen Harbour and Locks Department. In addition, they referred to the manuscript notes made by the competent customs official on the customs department form in relation to the clearance of the goods in question.

1 4 However, those documents were only sent to the Commission between 19 and 22 July 1993, in other words, after the period fixed by the Commission in its decision of 6 November 1992 had expired.

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JUDGMENT OF 1. 10. 1998 — CASE C-27/94

15 In its Summary Report N o VI/119/93 of 1 October 1993, the Commission noted that the export declaration in respect of 18 250 230 kg of barley bound for Russia had been accepted by the Terneuzen customs authorities on 27 November 1989 despite the fact that the barley had left Community territory on 25 November 1989. Moreover, it found that the Lloyd's register of ship movements showed that the Kapitan Stankov had not called at Terneuzen but had left Community territory straight away after its departure from Ghent.

16 O n the basis of that report, the Commission adopted the contested decision on 25 November 1993.

19 It claims that the national authorities fulfilled their obligations under Article 8(1) of Regulation N o 729/70 by ensuring that the refund was granted in compliance with all the conditions laid down by the Community legislation and, in particular, with the conditions set out in Articles 3, 4 and 47 of Regulation N o 3665/87.

20 The Commission denies applying Article 8(2) of Regulation N o 729/70 when it adopted the contested decision. It contends that the real questions raised by this case are, first, whether the Kapitan Stankov was in Terneuzen on 25 November 1989, whether inspections were carried out by the Netherlands authorities and, if so, what inspections, and second, whether the Netherlands authorities produced specific evidence to that effect in good time, in other words within the period pre- scribed by the Commission in its decision of 6 November 1992 which expired on 15 December 1992.

21 The Commission further contends that, in any event, and even if Article 8(2) of Regulation N o 729/70 applies, the Netherlands authorities were negligent in that they took 18 months to submit the documents which the Commission had on sev- eral occasions requested them to produce.

22 O n this point, it must first of all be borne in mind that, according to the principles governing the procedure for clearing E A G G F accounts as laid down in the case-law of the Court, only refunds granted 'in accordance with the Community rules' within the framework of the common organisation of agricultural markets are financed by the E A G G F (Case 347/85 United Kingdom v Commission [1988] E C R 1749, paragraph 11).

27 That rule is equally applicable in a case such as this where the Commission con- siders, on the basis of inspections carried out by its staff, that the Member State in question did not carry out the necessary inspections before the goods left customs territory (see also, on this point, Case C-198/94 Italy v Commission [1996] ECR I-2797, paragraph 36).

28 Furthermore, Article 8(1) of Regulation N o 729/70 imposes on Member States the general obligation to take the measures necessary to satisfy themselves that the transactions financed by the E A G G F are actually carried out and are executed cor- rectly, to prevent and deal with irregularities and to recover sums lost as a result of irregularities or negligence (Case C-8/88 Germany v Commission [1990] E C R I-2321, paragraph 17).

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NETHERLANDS v COMMISSION

29 In this case, the Netherlands authorities were not able to show, at least before the expiry of the period prescribed in its decision of 6 November 1992, that the Com- mission was wrong in its findings.

30 As the Advocate General rightly observes at points 25 to 27 of his Opinion, the letters from the Netherlands authorities of 25 June and 17 July 1992 merely throw additional light on the course of events during the weekend of 25 and 26 November 1989 and cannot therefore be deemed to constitute adequate evidence. N o r does the letter of 14 December 1992 contain any fresh evidence to support the asser- tions of the Netherlands authorities.

34 The Commission, in contrast, contends that the case-file clearly shows that there was ample correspondence between its departments and the Netherlands authori- ties in which the Commission made it clear from the outset that it required evidence of the transaction at issue. The Netherlands Government was therefore aware of the reasons for the contested decision.

35 In that connection, the Court has consistently held that the extent of the duty to state the reasons on which a decision is based, laid down in Article 190, depends on the nature of the act in question and on the context in which it was adopted (Case C-54/95 Germany v Commission [1993] E C R I-3399, paragraph 10).

36 In the particular context of the preparation of decisions relating to the clearance of accounts, the statement of reasons for a decision must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the E A G G F (see Case C-22/89 Netherlands v Commission [1990] ECR I-4799, para- graph 18).

37 In this case, as the Commission has pointed out, the case-file shows that the Neth- erlands Government was involved in the process by which the contested decision came about and that the Commission's uncertainty as to the circumstances sur- rounding the export of the barley in question was brought to the attention of the Netherlands authorities on several occasions.

38 In particular, the Commission indicated in its summary report the reasons which led to its refusal to clear the sum in dispute. Furthermore, by letter of 14 January 1992, it requested the Netherlands authorities to provide further information to dispel its uncertainty as to whether the goods had been declared for export within the prescribed period and whether customs had been in a position to inspect those goods.

O n those grounds,

T H E C O U R T (Sixth Chamber),

hereby:

1) Dismisses the action;

2) Orders the Kingdom of the Netherlands to pay the costs.

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