C-273/95

BURATTI v TAV

OPINION OF ADVOCATE GENERAL ELMER delivered on 14 November 1996 *

1. In this case the Pretura Circondariale 3. Article 5, Article 6(1) and Article 12(1) of (District Magistrate's Court), Verona (Italy), the basic regulation provide as follows: has referred to the Court for a preliminary ruling a question on the interpretation of various provisions adopted for the applica- tion of the premium system for raw tobacco. The background to the question is a dispute concerning the conversion rate to be applied in calculating the premium payable by a group of producers to one of its members 'Article 5 whose raw tobacco it had delivered to the processor concerned.

Granting of the premium shall be subject in The basic regulation particular to the following conditions:

(...) 2. In accordance with Council Regulation (EEC) N o 2075/92 of 30 June 1992 on the common organization of the market in raw tobacco 1 ('the basic regulation'), aid is granted to raw tobacco producers via the processors in the form of a premium for (b) quality requirements must be fulfilled; delivery of leaf tobacco to the processors.

* Original language: Danish. 1 — OJ 1992 L 215, p. 70, most recently amended by Council Regulation (EC) N o 415/96 of 4 March 1996 amending Regulation (EEC) N o 2075/92 on the common organization (c) the leaf tobacco must be delivered by the of the market in raw tobacco, and fixing the guarantee producer to the premises of the first pro- thresholds for leaf tobacco by group of tobacco varieties for the 1996 and 1997 harvests (OJ 1996 L 59, p. 3). cessor under a cultivation contract.

Article 12

(...)

1. In order to concentrate supply and adapt it to the qualitative requirements of the mar- ket, specific aid equivalent to 10% of the 2. Cultivation contracts shall be concluded premium shall be granted where cultivation by group of varieties. They shall commit the contracts are concluded between a first pro- cessor and a recognized group of producers and where the deliveries covered by such contracts account for the entire output of the 2 — OJ 1992 L 351, p. 17, most recently amended by Commis- sion Regulation (EC) No 1350/96 of 11 July 1996 (OJ 1996 members of the group.' L 174, p. 15).

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processor to taking delivery of the quantity Article 6 of leaf tobacco provided for in the contract and the producer or group of producers to deliver that quantity to the processor, to the extent that their actual production so allows. Tobacco delivered to processors must be of sound, fair and merchantable quality and free from any of the characteristics given in Annex II. The contracting parties may agree on stricter quality requirements.

(...) (...)

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Article 10 certificates; the third indent of Article 2 con- tains the following definition:

An amount equal to the premium shall be paid to the producer by the processing 'Article 2 undertaking within one month of the end of each delivery under contract. (...)

For the purposes of this Regulation:

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in the raw tobacco sector 4('the specific aid ing the agricultural conversion rates to be regulation') provides as follows: applied in the tobacco sector 5('the conver- sion rate regulation') provides as follows:

'Article 2

'Article 1

2. Marketing through the group (...) shall cover at least the following operations:

Cooperativa Tabacchi Verona ('CTV'), relat- 11. Buratti, which in 1993 had delivered ing to its members' total production of 88 529 kilos of tobacco to TAV, received Bright variety tobacco for the 1993 harvest. from the latter a premium which also was calculated on the basis of the agricultural conversion rate applicable on 1 August 1993. Buratti, however, considers that the appli- cable agricultural rate was that valid on 1 January 1994, since in its view the tobacco was not delivered to the processor until January 1994. For that reason Buratti brought an action against TAV before the 9. The order for reference contains no par- Pretura Circondariale, Verona, claiming the ticulars of the factual circumstances sur- difference between the premium calculated rounding the delivery of the tobacco. How- on the basis of the conversion rate valid on 1 ever, it does emerge from the written August 1993, as applied by TAV, and the observations submitted to the Court that amount as calculated on the basis of the between August 1993 and January 1994 the higher conversion rate valid on 1 January members of TAV placed tobacco in a ware- 1994. house made available by CTV to TAV with- out charge. Delivery notes containing a series of details of the tobacco were made out at the time. The delivery notes also stated that 'the undersigned processor (CTV) hereby declares that this note does not constitute The question referred assumption of responsibility for the tobacco'. The agreement between TAV and CTV in respect of the classification of the tobacco was signed on 28 January 1994. According to CTV's VAT returns, property in the tobacco was transferred to CTV on 7 and 31 January 1994. 12. By orders of 27 July 1995 and 4 Septem- ber 1995, the Verona Pretura Circondariale referred the following question to the Court for a preliminary ruling:

15. Only the Commission and Buratti have submitted written observations to the Court. They have argued that it is clear, from both the letter and the spirit of the provisions concerned, that the operative date for deter- mining the applicable conversion rate is the 13. Article 11(1) of the implementing regu- date on which the tobacco is delivered to the lation, referred to in the question, was processor, whether it is delivered by an indi- repealed and replaced as from 1 July 1993 by vidual producer or by a group of producers. the abovementioned Article 1 of the conver- The Commission adds that the term 'deliv- sion rate regulation, which is couched in ery under contract' used in Article 10 of the similar terms. It is clear from that article that implementing regulation is a concept of the agricultural conversion rate to be used Community law, the meaning of which is for converting premiums expressed in ECU not to be determined by reference to into national currency is the rate applicable national law. In its view, those expressions on 1 August of the year of harvest for deliv- refer to the physical delivery of tobacco to a eries up to 31 December of that year and processor pursuant to a cultivation contract. that applicable on 1 January of the following Buratti claims that 'delivery under contract' year for deliveries thereafter. means physical delivery carried out pursuant to the obligation to deliver under a cultiva- tion contract by the producer or group of producers who signed the cultivation con- tract and who thus were under an obligation to deliver the tobacco.

of producers. The national court probably 18. Although Article 1 of the conversion considered that that question was relevant to rate regulation lays down that it is the date the case which it has to determine because it of delivery of raw tobacco by the producer takes the view that the amount of the pre­ to the processor which determines the con­ mium paid by the processor to the group of version rate to be applied, it must none the producers in this case determines the amount less be interpreted, where a group of produc­ of the premium paid by the group to the ers is interposed between producer and pro­ producer. cessor, as referring to the date on which the tobacco was delivered by the group of pro­ ducers to the processor. Furthermore, this is also the upshot of the wording in Article 2(2) of the specific aid regulation, which refers respectively to: 'the conclusion by the group in its own name and on its own behalf of cultivation contracts for the whole of the production of the members of the group' and of 'the supply of the whole of the pro­ duction of the members of the group (...) for delivery to the processors'. The term 'deliv­ ery' employed in the singular in Article 10 of 17. I would point out in this connection that the implementing regulation and in the plu­ the starting point for the basic regulation is ral in Article 1 of the conversion rate regu­ indeed the situation in which the raw lation must therefore be interpreted as refer­ tobacco is delivered to a processor by the ring to the delivery of raw tobacco by a producer. Accordingly, Articles 5 and 6 of group of producers to a processor. It does the basic regulation state that the premium is not, however, mean the contribution of raw to be granted on condition that the tobacco tobacco by one producer to the group. is delivered under a cultivation contract con­ cluded between the producer and a proces­ sor. Nevertheless, it is clear from Article 12 of that regulation that the intention was to encourage producers to form groups which may take charge of delivery to processors: it provides for the grant of specific aid of 10% where the cultivation contract is concluded between a processor and a group of produc­ ers. Where a group of producers is inter­ posed between the producer and the proces­ sor, those provisions of the regulation which use the term 'producer' must therefore be 19. Moreover, this is borne out by the fact construed as referring to the producer or to that Article 10 of the implementing regu­ the group of producers, not only because of lation uses the term delivery 'under contract' the definition of the parties to a cultivation in specifying the time-limit for payment of contract laid down in Article 2(2) but also the amount equal to the premium. The con­ because of the definition of producer in the tract in question can only be the cultivation third indent of Article 2 of the quota regu­ contract referred to in Articles 5(c) and 6(1) lation as including groups of producers as of the basic regulation and in Article 2(2) well. and (3) of the implementing regulation,

which is concluded between a group of pro- from one Member State to another. Accord- ducers and a processor. ing to Article 189 of the Treaty, regulations have general application, are binding in their entirety and are directly applicable in all Member States: to my mind, it would be contrary to that article for the time for pay- ment of the premium to vary from Member State to Member State. The same date for 20. Although the expression delivery 'under application of conversion rates should be contract' is used in Article 10 of the basic used in each Member State. The concept of regulation (and only there), this must be delivery must therefore be a concept of because that article prescribes the time-limit Community law, its definition independent for the payment of the amount equal to the of national law. premium. If the expression 'under contract' had not been employed, this might have cre- ated the false impression that the premium had to be paid even if the goods delivered did not comply with the terms of the cultiva- tion contract. The expression therefore merely makes it clear that the processor need not pay premiums in respect of defective goods. 22. If the delivery of raw tobacco is the event which gives rise to the processor's obligation to pay the amount corresponding to the premium, the most logical solution, I believe, is that suggested by the Commis- sion, which is to interpret the concept of 'delivery' as the transfer of possession in the 21. If, therefore, in order for entitlement to goods to the processor. It is my opinion that the premium to arise a 'delivery' must be that concept must also include those cases in 'under contract', the question could arise which the tobacco is in a situation which whether the term 'delivery' should also be may plainly be equated to a transfer of pos- interpreted as delivery as defined in the law session and in which it would be formalistic of contract. To my mind, however, it is to treat differently, for example, delivery to a inconceivable that the Community rules sub-contractor undertaking to process the intended to leave the parties free to deter- tobacco for the processor. Since the date of mine the time for payment of the premium transfer of possession in that sense will gen- by an agreement as to the date of delivery. erally coincide with the extinction of the Delivery clauses in sales agreements, for right of the vendor (the producer or the example, frequently provide for delivery to group of producers) to block delivery of the take place when goods are handed over to a goods, that interpretation will ensure that the carrier, that is to say, long before the pur- premium is not paid until after the tobacco is chaser (processor) takes possession of the at the disposal of the processor, which is the goods, on which processing is conditional. If necessary condition in order for the process- the term 'delivery' were to be construed as ing to confer added value on the tobacco, so referring to the rules on the sale of goods, that by selling the product the processor which have not yet been harmonized at may obtain a sufficient return to cover the Community level, the organization of the purchase price that it has had to pay to the market might be implemented differently producer or to the group of producers.