C-161/96

SÜDZUCKER MANNHEIM v HZA MANNHEIM

OPINION OF ADVOCATE GENERAL LÉGER delivered on 6 November 1997 *

4 1. The Bundesfinanzhof has asked the Court of 18 December 1967, was completely reor­ whether Commission Regulation (EEC) No ganised in 1981 by the adoption of the basic 2670/81 of 14 September 1981 laying down regulation. detailed implementing rules in respect of 1 sugar production in excess of the quota ('the contested regulation'), read in conjunc­ tion with certain provisions of Commission Regulation (EEC) No 3183/80 of 3 Decem­ ber 1980 laying down common detailed rules for the application of the system of import and export licences and advance fixing cer­ 3. The latter aims to maintain the necessary 2 guarantees in respect of employment and tificates for agricultural products, is consis­ tent with the principle of proportionality. standards of living for both producers of basic products and manufacturers of sugar in the Community and to ensure the continu­ ous supply of sugar to all consumers at rea­ sonable prices, by stabilising the sugar mar­ 5 ket. The relevant Community law

Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organisation of the 4. The market is regulated by means of tar­ markets in the sugar sector ('the basic regu- 3 get prices and intervention prices which are lation' or 'the 1981 reform') fixed annually for certain products (in par­ ticular, white sugar and raw sugar), the stor­ age of the products and the introduction of a common trading system at the external fron­ tiers of the Community, based on a system of import levies and export refunds. The 2. The common organisation of the markets production quota system established in the in the sugar sector, which was established by sugar sector by Regulation No 1009/67 is 6 Regulation No 1009/67/EEC of the Council also maintained.

6. As the effectiveness of these measures depends on being fully informed of move­ 8. The sale of A sugar is guaranteed by ments in trade with third countries, 8Article means of an intervention price (Articles 5 13 provides that all imports into and exports and 9) and receives export aid (Article 18). out of the Community are to be conditional There is no intervention price for B sugar, on the presentation of an import licence or but it can be exported to non-member coun­ an export licence, the issue of which is 'con­ tries and receive export aid corresponding to ditional upon the lodging of a deposit which the difference between the intervention price will guarantee that importation or exporta­ and the world market price of sugar. This aid tion will be effected during the period of is paid in the form of an export refund validity of the licence and which will be for­ (Article 19). feit in whole or in part if the transaction is not effected, or is only partially effected, within that period'.

9. Article 24 provides that the Member 7. Three types of quota, governed by spe­ States are to allocate an A quota and a B cific rules set out in Articles 23 to 32, must quota to each sugar-producing undertaking be distinguished: established in their territory for a certain period. These quotas accordingly limit the quantity of sugar which the undertaking can produce and sell direct on the Community or the world market, in return for which the — the A quota, which is the basic quota; undertaking may receive refunds.

— the B quota, which is the quantity of sugar produced exceeding the basic quota but within the 'maximum quota' corre­ 10. All the costs of disposing of Community sponding to quota A multiplied by a sugar surpluses are met by the producers of coefficient; A and B sugars themselves, by means of con­ tributions to production and to storage costs (Article 8). In return, producers of A and B sugars are free to market them within the 7 — See the eleventh recital in the preamble. 8 — See the ninth recital in the preamble. Community.

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The contested regulation Regulation No 3183/80

17. Because of the overwhelming importance of import and export licences in the common 13. This regulation introduces the measures 10 organisation of agricultural markets, this necessary for implementing Article 26 of the regulation lays down common detailed rules basic regulation, that is to say, it lays down for the application of the system of import detailed rules in relation to the production of and export licences and advance-fixing cer­ C sugar. tificates for agricultural products.

18. An export licence constitutes authorisa­ 14. Producers of C sugar must furnish proof tion and gives rise to an obligation to export, that it was not sold on the internal market under that licence, the specified net quantity and that it was exported to non-member of the relevant product during the period of countries. validity of the licence (Article 8). The issue of a licence is conditional upon the provision of security (Article 13).

15. Such proof must be submitted to the competent agency of the Member State on 19. An application for a licence must be sent whose territory the C sugar was produced to the competent national agency. No appli­ (Article 2(1)) and it must comply with cation will be considered (Article 12) unless the requirements in the first paragraph of it is completed in accordance with the Article 2(2). requirements of pre-established application forms (Article 16).

23. This proof is furnished by the produc­ 11 — Commission Regulation (EEC) No 223/77 of 22 December tion of Copy No 1 of the licence endorsed as 1976 on provisions for the implementation of the Commu­ nity transit procedure and for certain simplifications of that provided in Article 22 (Article 31(1)(a)). procedure (OJ 1977 L 38, p. 20).

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27. Under Article 12, the customs office of to be accepted as equivalent, stating the departure (within whose area the C sugar grounds for such application and furnishing was produced) issues Copy T No 5. The supporting documents (Article 31(4)). There­ same office verifies that the goods conform fore the acceptance of documents equivalent with the particulars shown in Copy No 1 (of to Copy T No 5 presupposes that the cus­ the export certificate issued to the producer toms formalities described above were com­ of the goods). In addition, the goods may be pleted beforehand. examined.

Commission Regulation (EEC) No 2630/81 of 10 September 1981 on special detailed rules for the application of the system of import 28. If examination of the goods confirms the and export licences in the sugar sector 12

particulars in Copy No 1, the export declara­ tion is accepted by the customs office, which places on it the attributions and endorse­ ments (Article 11 of Regulation No 223/77), certifying that the producer's export declara­ tion is correct, and issues Control Copy T No 5. The date of this verification is deemed 31. Following the reform of the common to be the date of export. agricultural policy in the sugar sector by the 13 basic regulation, this regulation lays down special detailed rules for the application of the system of import and export licences established by Article 13 of the basic regu­ lation.

Facts and procedure

38. By decision of 9 June 1992, the Haupt- zollamt Mannheim, finding that proof of exportation had not been furnished in the prescribed manner, demanded payment by 34. The Bundesfinanzhof has requested a Südzucker of the amount provided for by preliminary ruling in the context of proceed­ Article 3(1)(a) of the contested regulation. ings between Südzucker Mannheim/ Ochsenfurt AG ('Südzucker'), a German undertaking established in Mannheim, and the Hauptzollamt (Principal Customs Office), Mannheim.

39. Südzucker took the view that the docu­ ments it had produced were equivalent to 14 those required by the contested regulation 35. Südzucker sold a quantity of C sugar and instituted proceedings against the which it manufactured during the 1986/87 decision before the Finanzgericht Mannheim. marketing year to A. Töpfer/Hamburg, also The action was dismissed on the ground that established in Germany. proof that the C sugar had been exported had not been furnished by the production of the documents and information laid down in Article 2(2)(a) of the contested regulation.

36. The sugar was exported to Switzerland without customs clearance on export. Conse­ 14 — Namely consignment documents and export declarations, copies of rail waybills and receipts for duties paid, issued by quently Südzucker was thus unable to the Swiss customs authorities.

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41. Considering that the outcome of the case depended on whether Articles 2 and 3 of the contested regulation were valid, the Bundes­ finanzhof referred the following question to 43. On the other hand, the national court is the Court for a preliminary ruling: in doubt as to whether the consequence aris­ ing from the non-production of such proof, namely, that the C sugar is deemed to have been sold on the internal market, is not con­ trary to the principle of proportionality, as laid down in the judgments in the Man 16 17 (Sugar) case and the Maas case. 'Is Commission Regulation (EEC) No 2670/81 of 14 September 1981 laying down detailed implementing rules in respect of sugar production in excess of the quota, read in conjunction with Commission Regulation (EEC) No 3183/80 of 3 December 1980 lay­ ing down common detailed rules for the application of the system of import and export licences and advance fixing certificates for agricultural products, valid, having 44. In those judgments the Court stated regard in particular to the Community law that, where Community legislation makes a principle of proportionality, in so far as its distinction between a primary obligation and result is that sugar is deemed to have been a secondary obligation it cannot, without disposed of on the internal market — that breaching the principle of proportionality, being the basis for levying the charge on penalise failure to comply with the second­ sugar production — if it has actually been ary obligation as severely as failure to com­ exported but without completion of the cus­ ply with the primary obligation. toms formalities, and proof consequently cannot be furnished by means of copy No 1 of the export licences bearing the attribu­ 15 — Order for reference, part II, paragraph 5. tions and endorsements of the customs 16 — Case 181/84 [1985] ECR 2889, paragraph 20. authorities?' 17 — Case 21/85 [1986] ECR 3537, paragraph 15.

49. For a producer of C sugar, the primary obligation consists precisely in not disposing of C sugar on the Community's internal mar- ket and in exporting it to non-member coun- 46. On the basis of that distinction and the tries, in accordance with the first paragraph consequence thereof — the rule that failure of Article 26(1) of the basic regulation. In to comply with the secondary obligation return, under the second paragraph of may not be penalised as severely as failure to Article 26(1), the producer is exempted from comply with the primary obligation without payment of the contributions and costs infringing the principle of proportionality — inherent in the implementation of the 1981 the Court found that failure to fulfil a pri­ reform. The contested regulation is simply a mary obligation may be penalised by the faithful application of this provision because total loss of a deposit, without giving rise to it provides that a certain charge will be levied any breach of the principle of proportional­ if proof of completion of the primary obliga­ ity. tion is not produced. Furthermore, the prin­ ciple that a right can be validly recognised only if proof of compliance with the condi­ tions giving rise to that right is produced is generally accepted by all the Member States. I must conclude from this that the obligation to prove fulfilment of the primary obligation is necessarily included in that obligation. In other words, I conclude that, as the con­ tested regulation makes no distinction between a primary and a secondary obliga­ 47. The national court refers to this case-law tion, the Man (Sugar) and Maas judgments and concludes that the primary obligation, are not relevant. which was fulfilled in the present case, was to export; it expresses doubt as to whether that obligation also included proof of completion of the customs formalities on 18 exportation and production of the licence.

54. As the producers of A and B sugar are the only ones who finance it, they alone are 51. It is clear from the Court's consistent authorised to dispose of their production on case-law that the principle of proportionality the internal market with price guarantees or requires that acts of the Community institu­ export aids. tions do not go beyond what is appropriate and necessary to attain the objectives legiti- mately pursued by the legislation in question; where there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the 55. By introducing Article 26 of the basic 19 aims pursued. regulation, the Council shows that the objec­ tives of the 1981 reform are attained if a. pro- ducer of C sugar proves that the sugar in 19 — See, for example, Case C-354/95 The Queen v Minister for excess of the quota has not been disposed of Agriculture, Fisheries and Food, ex parte National Farmers' on the internal market and that it has been Union and Others [1997] ECR I-4559, paragraphs 49 and 50. exported to non-member countries.

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56. Under Article 26, the essential principles 57. As these are the objectives of Article 26, permitting the correct operation of the we must consider whether the Commission C quota are as follows: has gone beyond what is appropriate and necessary for attaining them.

— in principle, C sugar cannot be disposed of on the internal market; 58. The Court has observed that 'where the evaluation of a complex economic situation is involved, the Commission and the Man­ agement Committee enjoy a wide measure of discretion. In reviewing the legality of the — likewise it must be exported to non- exercise of such discretion, the Court must member countries in the natural state confine itself to examining whether it is not before 1 January following the end of the vitiated by a manifest error or misuse of marketing year in question; power or whether the institution in question has not exceeded the limits of its discre­ 20 tion'.

— as white sugar or raw sugar, non- denatured ... in its natural state, 62. The next question is whether, as Süd­ zucker claims, the measure adopted is mani­ festly inappropriate to the objective pursued and whether it would have been more appro­ priate to permit the production of means of proof other than those required by the con­ — without refund or levy, tested regulation.

— from the Member State on whose terri- tory it was produced. 63. The function of the contested regulation is precisely to lay down the conditions for producing proof that C sugar has not been sold on the internal market and that its exportation to non-member countries has been effected. If no proof is furnished that the sugar ... was exported from the Community before 1 January following the end of the marketing year during which the C sugar ... was pro­ duced, the quantity in question shall be con- sidered to have been disposed of on the inter- 22 64. Article 1(1) of the contested regulation nal market.' provides as follows:

'1 . The C sugar ... referred to in Article 65. It is clear from Article 1(1) of the con­ 26(1) of Regulation (EEC) No 1785/81 must tested regulation that a manufacturer of be exported from the Member State on whose C sugar must prove three things. First, he territory [it was] produced. must prove that the C sugar exported is white sugar or non-denatured raw sugar and, secondly, that it was exported without 22 — Emphasis added. refund or levy.

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SÜDZUCKER MANNHEIM v HZA MANNHEIM

(b) the documents referred to in Article 30 of Regulation (EEC) No 3183/80 required for the release of the security;

69. An examination of Article 1 thus shows that the Commission has given proper effect to the objectives of Article 26 of the basic regulation and that a producer of C sugar (c) a statement by the manufacturer to the who merely proves that a certain quantity effect that the C sugar ... was produced of C sugar has been exported from the by him.'

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72. The export licence issued by the compe­ tions') are sent by the producer of the tent agency under Article 3 of Regulation C sugar to the competent authority. No 2630/81 is in fact a manifold form con­ sisting of Copy No 1, Copy No 2 and the request for exportation in respect of produc­ tion in excess of the quota, together possibly with additional copies of the licence setting out particulars of the licence holder and the 75. By means of this information the auth­ goods for which the licence is requested. ority verifies that the requirements of Article 26 of the basic regulation have been fulfilled and it can then take the appropriate mea­ 23 sures.

76. I therefore conclude that the documents 73. This form is then processed in the same required under Article 2 of the contested way as that laid down by Regulation regulation are not only necessary, but also No 3183/80, which I have described. entirely appropriate to the objective of the 1981 reform.

79. Therefore, since the goods are checked even before they leave Community territory, all the information in a document is authen­ ticated by the competent authorities, which facilitates equal treatment of producers. Consequently the harmonised production of proof is reliable, clear to the user and easy to 81. Furthermore, it must be stressed that, in administer for the Commission. It should be the present case, Südzucker has fulfilled none borne in mind that, pursuant to Article 5 of of the obligations laid down by the contested Council Regulation (EEC) No 729/70 of 21 regulation because neither the export licence April 1970 on the financing of the Common bearing the attributions and endorsements 24 Agricultural Policy, the expenditure of the nor Copy T No 5 have been produced, and Member States in respect of measures counsel for Südzucker has observed that it financed by the EAGGF are charged to the was not a matter of calling into question the Community budget only after the accounts whole of the law relating to export licences have been cleared by the Commission. in the agriculture sector or the law of the common organisation of the sugar markets, or of not using the same licences in the future, but of obtaining satisfaction from its national court by means of a judgment given 25 in equity on a quite exceptional basis.

80. The means of proof proposed by Süd­ zucker, however, do not offer these advan­ tages. They do not necessarily testify to the same controls because the customs authori­ ties of the non-member countries issuing 82. Consequently the solution proposed by them are not necessarily guided by the same Südzucker is not a more suitable and less objective as that of the 1981 reform. The onerous means than the customs processing Member States cannot, on that basis, be of Copy No 1 of the export licence.

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