JUDGMENT OF 10. 3. 1971 — CASE 38/70 TRADAX v EINFUHR- UND VORRATSSTELLE GETREIDE
In Case 38/70 Reference to the Court under Article 177 of the EEC Treaty by the Verwaltungsgericht (Administrative Court) Frankfurt am Main for a preliminary ruling in the action pending before that court between
THE COURT composed of: R. Lecourt, President, A. M. Donner and A. Trabucchi, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore (Rapporteur) and H. Kutscher, Judges, Advocate-General: A. Dutheillet de Lamothe Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure
On 16 May 1967 Deutsche Tradax GmbH, a company carrying on business in Hamburg, obtained from the Einfuhr- und Vorratsstelle für Getreide und Futtermittel of Frankfurt am Main an import licence for 5000 metric tons of barley subject to a levy fixed in advance.
The licence was valid until 31 August 1967.
June 1967 was specified as the month of importation.
The Einfuhr- und Vorratsstelle fixed the levy for May and June 1967 at DM 174.60 per metric ton, and for July and August 1967 at DM 97.60 per metric ton, to which was to be added the premium laid down by Article 15 (2) of Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the market in cereals (Official Journal, English Special Edition 1967, p. 33), which was fixed at DM 2.20 for July and at DM 5 for August 1967.
Issue of the licence was conditional on the lodging of a deposit equal to five units of account per metric ton guaranteeing the obligation to import during the period of validity of the licence.
Since the import was only partially effected (2498.92 metric tons) during the period of validity of the licence, the Einfuhr- und Vorratsstelle für Getreide und Futtermittel, by decision of 14 September 1967, declared the deposit to be forfeit to the extent of DM 43021.60, in accordance with Article 8 (1) of Regulation No 183/67 of the Commission of 27 June 1967 on import and export licences for cereals and cereal-based processed products (Official Journal 1967, p. 2631).
On 30 November 1967 the Einfuhr- und Vorratsstelle rejected the appeal lodged by Deutsche Tradax on 11 October. The latter commenced proceedings before the Verwaltungsgericht Frankfurt am Main on 30 December 1967.
By order of 25 February 1970, registered at the Court on 23 July 1970, the Verwaltungsgericht Frankfurt am Main requested the Court, pursuant to Article 177 of the EEC Treaty, to give a preliminary ruling on the following questions:
1) Is Regulation No 120/67 of the Council of 13 June 1967 valid in so far as in the final paragraph of Article 12 (1) it makes the issue of an import licence conditional on the lodging of a deposit and provides that that deposit shall be forfeited in whole or in part if importation is not effected during the period of validity of the licence?
2) If the answer to Question 1 is affirmative: does the expression ‘levy fixed in advance’ in Article 8 (3) of Regulation No 183/67 of the Commission of 27 June 1967 mean the levy fixed for the final month of the period of validity of the licence or, as the defendant contends in reliance on Article 15 of Regulation No 120/67, the rate of levy fixed for the expected month of importation specified in the application of the holder of the licence?
The order of the Verwaltungsgericht contains in particular the following observations:
The system of deposits in relation to cereal imports, as instituted by Regulations Nos 120/67 and 183/67, is incompatible with Article 2 (1) of the Constitution of the Federal Republic of Germany, in that it restricts, to an extent irreconcilable with the requirements of ‘the constitutional order’, the fundamental right of traders to freedom of action, to freedom of development and to economic freedom.
The issue of import licences has a regulatory function, its objective being to enable the position over the whole market to be studied and controlled; it is therefore of public interest. However, in view of Af the Basic Law, compulsory use of the licences cannot be confined within the limits of the ‘constitutional order’ unless it is the indispensable and sole possible means of obtaining a comprehensive view of the market as required by the interests of the Community. In fact, a valid method involving fewer restrictionrticle 2 (1) os on the freedom of action of traders is conceivable: compulsory notification.
The finding that a system equally adequate to the objective sought and less disruptive of the fundamental right of freedom of action is possible is sufficient of itself to make the obligation to import, guaranteed by the lodging of a deposit as provided by Article 12 of Regulation No 120/67, appear unconstitutional.
Moreover, it is at the very least doubtful whether the relevant rate of levy can be that fixed for the intended month of importation as stated in the application of the holder of the licence.
In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted on 16 October 1970 by the Government of the Kingdom of the Netherlands, on 17 October by the plaintiff in the main action, on 20 October by the defendant in the main action and on 21 October by the Commission of the European Communities.
After hearing the report of the Judge-Rapporteur and the views of the Advocate-General the Court decided to open the oral procedure without any preparatory inquiry.
The parties to the main action and the Commission presented legal argument at the hearing on 19 January 1971.
The Advocate-General delivered his opinion on 10 February 1971. For the purposes of the procedure before the Court the plaintiff in the main action was represented by Otto Krauel and Gerhard Commichau, Advocates of the Hamburg Bar, the defendant in the main action by Albrecht Stockburger, Advocate of the Frankfurt am Main Bar, the Government of the Kingdom of the Netherlands by W. Riphagen, Legal Adviser to the Ministry for Foreign Affairs, and the Commission by its Legal Adviser, Claus-Dieter Ehlermann.
II — Observations submitted to the Court
The written and oral observations submitted to the Court may be summarized as follows:
Deutsche Tradax GmbH, the plaintiff in the main action, notes with respect to the first question that the existence in Community law of fundamental individual rights has been recognized both by legal doctrine and by the Court of Justice which has itself stated that it is its task to ensure respect for those rights. The validity of the regulation at issue must be considered above all in relation to Community law and to the fundamental rights recognized by that law.
Or particular prominence amongst the fundamental rights recognized under Community law is the right to the free exercise of economic activity and the principle of proportionality of means. Both are violated by Regulation No 120/67 in so far as it institutes the system of deposits.
That system is not necessary to the implementation of the procedures for the regulation of markets, in particular the fixing of target prices, levies, refunds and denaturing premiums and the possible adoption of safeguard clauses; since the import licences are valid for a period of between two and eight months they do not in |any event allow effective control to be exercised over trade. Finally, the objective sought could be attained by less oppressive means.
Regarding the second question the plaintiff in the main action is of the opinion that the expression ‘levy fixed in advance’, within the meaning of Article 8 (3)(b) of Regulation No 183/67, must be taken to mean the levy fixed in advance for the final month of the period of validity of the import licence.
The arguments adduced in support of the opposite interpretation from Article 15 (2) of Regulation No 120/67 and Article 8 of Regulation No 183/67 itself are not convincing.
However the following considerations appear to be of some importance:
According to Article 8 (3)(b) of Regulation No 183/67, the supplement to the deposit consists of the ‘levy fixed in advance’ plus the premium fixed for the month of importation indicated in the licence or for the final month of the period of validity of the licence, if the latter is higher, minus the levy applicable on the final day (equivalent to the final month) of the period of validity of the licence. Although this provision is concerned with the premium fixed for the final month of the period of validity of the licence only if it is higher than the premium fixed for the month of importation stated by the licence holder, it is logical to work on the basis of levies and of a premium which are applicable at the same time.
This finding is consistent with the objective of the system of deposits, which is to ensure that the importations authorized are actually effected. Moreover, it is supported by Article 9 (a) and (b) of Regulation No 140/67 of the Council of 21 June 1967 on rules for the advance fixing of levies on cereals (Official Journal, English Special Edition 1967, p. 91), by Article 5 (2) of Regulation No 183/67, reproduced in Article 5 (2) of Regulation No 473/67 of the Commission of 21 August 1967 on import certificates for cereals, cereal-based processed products, rice, broken rice and rice-based processed products (Official Journal 1967, No 204, p. 16) and by Regulation No 638/70 of the Commission of 7 April 1970, amending Regulation No 473/67 (Official Journal 1970, No L 78, p. 7).
Moreover it is illogical, in the case of the partial utilization of a licence, to apply one levy to the quantities imported and another levy for the calculation of the deposit in respect of the quantity not imported. The Einfuhr- und Vorratsstelle für Getreide und Futtermittel, the defendant in the main action, maintains in reply to the second question that the only precise interpretation of the concept of ‘levy fixed in advance’ is that suggested by it which it has applied for many years, according to which the relevant levy is that fixed for the month of importation stated in the application of the holder of the licence.
It is clear from Article 8 (3) of Regulation No 183/67 that the three concepts of levy fixed in advance, premium fixed in advance and refund fixed in advance as contained therein fulfil the same function as factors in the calculation for determining the amount of the additional deposit. Although the regulation expressly provides that, in the case of the premium on an import licence and the refund on an export licence, the relevant amount is, in principle, that which is applicable to the final month of the period of validity of the licence, nothing of the sort was provided in respect of the levy fixed in advance. It must be concluded that, when speaking of the ‘levy fixed in advance’, Article 8 (3) cannot mean the levy applicable to the final month of the period of validity of the licence. The only levy which can be taken into account is that in force during the month stated to be the month of importation, since there is no indication that any other levy can be relevant.
This interpretation is confirmed by the wording and general system of the provisions of the basic regulations concerning advanced fixing of the levy.
It appears in particular from Article 15 (2) of Regulation No 120/67 that in the event of the advance fixing of the levy only one levy is fixed, which is calculated in relation to the month of importation indicated by the holder of the licence. This provision is not disregarded by Article 9 (a) of Regulation No 140/67, which is based on Article 15 (4) of Regulation No 120/67 and is concerned with exceptional circumstances, different from those envisaged by Article 8 of Regulation No 183/67. Article 5 (2) of Regulation No 183/67 embodies the same concept.
The proposed interpretation corresponds to the meaning and objective of the system of deposits: it is the purpose of the deposit to encourage the importer to fulfil within the prescribed period the obligation to import arising from the licence. Provision was made for an additional deposit in order to diminish the risk of speculation on the levy and to obviate the temptation not to use a licence, which are particularly great in the case of a levy fixed in advance. In fixing the additional deposit the criterion adopted was the difference between the levy fixed in advance for the intended month of importation and the levy applicable on the final day of the period of validity of the licence; that difference could be considered as representing the importer's interest in not utilizing a licence.
The objection that this interpretation is based upon comparison between two levies which are not comparable because they are calculated on the basis of two different threshold prices may be countered by the fact that one of the components of the levy, the cif price, is itself different according to whether importation is effected on the final day or during the final month of the period of validity of the licence. The interpretation proposed by the defendant in the main action is not therefore less logical than the contrary interpretation.
With regard to the second question the Government of the Kingdom of the Netherlands is of the opinion that the ‘levy fixed in advance’ mentioned in Article 8 (3)(b) of Regulation No 183/67 is to be taken to mean, in principle, the levy applicable during the final month of the period of validity of the licence.
The argument adduced by the defendant in the main action from Article 15 (2) of Regulation No 120/67 is misconceived. This provision, which is borrowed almost word for word from Article 17 (2) of Regulation No 19, was based upon the supposition that, on the one hand, in the event of advance fixing of the levy, only one levy would be fixed, that is to say, the levy corresponding, following possible adjustments, to the intended month of importation, and, on the other hand, that this levy would be applied throughout the entire period of validity of the licence, whatever the actual month of importation. At the time of the entry into force of the common organization of the market in cereals, Regulation No 54 instituted a system which, as an exception to the provisions of Article 17 (2) of Regulation No 19, provided for the possibility of applying different levies. In this system, which has since remained in force, emphasis is laid upon the fact that the individual concerned has advance knowledge of the various levies applicable to an importation effected during one of the months of the .period of validity of the licence. This is why, pursuant to Article 7 of Regulation No 54, all levies applicable during the various months of the period of validity of a licence are fixed in advance both in law and in fact. The system was not modified when, on 1 July 1967, Article 17 (2) of Regulation No 19 was replaced by Article 15 (2) of Regulation No 120/67 and Article 7 of Regulation No 54 was replaced by Article 9 of Regulation No 140/67.
The fact that all levies valid for each of the months of the period of validity of the import licence are fixed in advance is confirmed by Article 5 (2)(b) of Regulation No 183/67. This provision had no meaning in the system originally envisaged for the fixing of levies.
The obligation to import arising from the issue of a licence is indispensable to obtaining a comprehensive view of the market situation. The system defended by the defendant in the main action is not capable of ensuring, in all cases, an adequate sanction in respect of the non-fulfilment of that obligation. It does not therefore conform to the objective sought by the system of deposits.
Moreover, its result is inequitable since it compares amounts which are not comparable, one having effectively suffered the effect of the so-called ‘staggered’ reduction at the time of transfer to the new marketing year, and the other not having been so altered.
Having set out, in the written procedure, the reasons why it is of the opinion that the deposit system does not threaten fundamental rights recognized by Community law, the Commission of the European Communities states, in its oral observations, that it believes that the case-law of the Court, in particular the judgment given on 17 December 1970 in Case 11/70 (request for a preliminary ruling by the Verwaltungsgericht Frankfurt am Main in the case between Internationale Handekgeseilschaft mbH and Einfuhr- und Vorratsstelle für Getreide und Futtermittel) provides the answer to the first question referred in this case.
Regarding the second question the Commission, after a restatement of the two hypotheses at issue and the arguments from the texts which may be deduced in favour of one or the other, maintains that the criteria of interpretation, and in particular the objective of the system of deposits, clearly militate in favour of the second hypothesis, according to which the expression ‘levy fixed in advance’ refers to the levy fixed for the final month of the period of validity of the import licence.
The additional amount of the deposit is obtained by a comparison between, on the one hand, the ‘levy fixed in advance’ plus a premium, and, on the other hand, the ‘levy applicable on the final day of the period of validity of the import licence’. The latter consists of the threshold price, less the cif price in force on the same day. The threshold price is also used to calculate the levy fixed in advance for the final month of the period of validity of the import licence. This is not the case for the levy fixed in advance for the month of importation indicated on the licence. It is normal practice to compare levies calculated on the basis of the same point of reference.
The levy fixed in advance is increased, for the purposes of the comparison, by a premium ‘fixed by the scale of premiums in force … or for the final month of the period of validity of the licence, if the latter is higher’. Since account is taken of the premium in force during the final month, it might be concluded that account must also be taken of the levy fixed in advance in respect of that final month.
The purpose or the deposit is to encourage importers to effect importations of the quantities indicated on the licence during its period of validity. In the case of a levy fixed in advance the deposit should therefore prevent the importers from succumbing to the temptation of requesting, for the same quantity, a new levy fixed in advance at a lower level or of importing the said quantity with a new licence not involving a levy fixed in advance, against payment of the lower levy fixed for the day of importation.
The advantage to the importer in abandoning the old licence is directly proportionate to the diminution of the levy during the period of validity of the licence. Article 8 (3) of Regulation No 183/67 calculated it at a flat rate. That provision must be interpreted in accordance with its objective, so as to obviate as far as possible the temptation to abandon a licence.
There are good reasons for assessing the advantages to the importer of abandoning the old licence by comparing the levy fixed in advance and the levy in force on the final day of the period of validity of the licence. It is therefore in conformity with the purpose of the deposit to calculate the additional amount by comparing the levy fixed in advance for the final day of the period of validity of the licence, which is equal to the levy fixed for the final month, and the levy in force at the same time.
On the other hand, there is no plausible reason for assessing this advantage by means of a comparison between the levy fixed in advance for the intended month of importation and the levy in force on the final day of the period of validity of the licence: these two levies never fall due at the same time and the importer would therefore have no interest in abandoning one in favour of the other.
What is more, to take into account the levy fixed in advance for the intended month of importation would be in contradiction with the objective of the system of deposits. In fact, this levy is, as a general rule, lower than that which has been fixed for the final month of the period of validity of the licence, since the threshold price is staggered on a monthly basis and rises during the cereal marketing year.
Article 8 (3)(b) of Regulation No 183/67 is reproduced word for word in Regulation No 473/67 and has been interpreted and applied in a number of different ways by the Member States in pursuance of that regulation. In order to put an end to these difficulties of interpretation, Regulation No 638/70 amended the wording of Article 8 (3)(b) in so far as the expression ‘levy fixed in advance’ must henceforward—since Regulation No 638/70 cannot be given retroactive effect—be understood as referring to the levy fixed for the final month of the period of validity of the import licence.
It should also be noted that Regulation No 2434/70 of the Council of 30 November 1970, amending Regulations Nos 120/67 and 359/67 on the common organization of the markets in cereals and in rice (Official Journal 1970, No L 262, p. 1), stated that ‘in general, the month shown on the import licence does not correspond to the month in which importation takes place’ and, in consequence, deleted from Article 15 of Regulation No 120/67 the reference to the threshold price in force during the expected month of importation.
Grounds of judgment
1. By order of 25 February 1970, received at the Court on 23 July 1970, the Verwaltungsgericht Frankfurt am Main has requested the Court, pursuant to Article 177 of the EEC Treaty, to give a preliminary ruling on the following questions: (1) Is Regulation No 120/67 of the Council of 13 June 1967 valid in so far as in the final paragraph of Article 12 (1) it makes the issue of an import licence conditional on the lodging of a deposit and provides that that deposit shall be forfeited in whole or in part if importation is not effected during the period of validity of the licence? (2) If the answer to Question (1) is affirmative: does the expression ‘levy fixed in advance’ in Article 8 (3) (b) of Regulation No 183/67 of the Commission of 27 June 1967 mean the levy fixed for the final month of the period of validity of the licence or, as the defendant contends in reliance on Article 15 of Regulation No 120/67, the rate of levy fixed for the expected month of importation specified in the application of the holder of the licence?
First question
2. The first question, relating to the legality of the system of deposits initiated in the final subparagraph of Article 12 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals (Official Journal, English Special Edition 1967, p. 33), is materially identical to a question referred by the same court in Case 11/70 upon which a ruling was given in the judgment of the Court of 17 December 1970.
3. In that judgment the Court ruled that examination of the question put by the Verwaltungsgericht revealed no factor capable of affecting the validity of the provisions at issue.
4. No fresh factor capable of altering that judgment has been produced during these proceedings.
Second question
5. The second question concerns the interpretation of the expression ‘levy fixed in advance’ employed in the first paragraph of Article 8 (3) (b) of Regulation No 183/67/EEC of the Commission of 27 June 1967 on import and export licences for cereals and cereal-based processed products (Official Journal 1967, p. 2631), which is one of the factors to be taken into account in calculating the deposit or part of the deposit which is forfeited if importation is not effected or is only partially effected during the period of validity of the import licence.
6. It appears from the information supplied in the course of these proceedings that the competent authorities of the various Member States have interpreted this provision in different ways. Some of them believe that the phrase ‘levy fixed in advance’ within the meaning of the provision at issue must be understood as the rate of levy fixed for the expected month of importation specified in the import licence, while others take the view that this expression means the rate fixed for the final month of the period of validity of the licence.
7. The Einfuhr- und Vorratsstelle für Getreide und Futtermittel of Frankfurt am Main, which is the intervention agency for the Federal Republic of Germany and is the defendant in the main action, contends, in reliance on Article 15 (2) of Regulation No 120/67, that the expression ‘levy fixed in advance’ is to be understood as referring to the rate of levy fixed for the expected month of importation. The plaintiff in the main action, on the other hand, takes the view that this expression refers to the rate fixed for the final month of the period of validity of the licence. For a long time the Commission upheld the interpretation put forward by the German intervention agency, but before the Court it has adopted the second interpretation, relying in particular on Article 9 of Regulation No 140/67/EEC of the Council of 21 June 1967 on rules for the advance fixing of levies on cereals (Official Journal, English Special Edition 1967, p. 91) and on arguments adduced from the objective of the system of deposits.
8. Article 8 (3) of Regulation No 183/67 states that the amounts to be taken into consideration when calculating the deposit or portion of the deposit which is forfeited, in respect of import certificates for which the levy has been fixed in advance, are as follows: Although this provision has taken care to indicate with precision various factors involved in the calculation of the amount of the deposit or part deposit to be forfeited, it has not defined what is to be understood by ‘levy fixed in advance’. In order to interpret that expression, reference must be made to the provisions which form the legal basis of Regulation No 183/67 as a whole, namely Regulations Nos 120/67 and 140/67 of the Council.
‘0.50 units of account per metric ton, increased by an amount equal to:
the levy fixed in advance, increased by a premium provided for in the scale of premiums in force on the day of lodging the request for the licence for the month of importation shown in the licence, or for the final month of the period of validity of the licence, if the latter is higher; and
reduced by the levy applicable on the final day of the period of validity of the import licence.’
9. Article 15 (2) of Regulation No 120/67 provides that in a case of advance fixing the levy to be charged on importation is ‘the levy applicable on the day on which application for a licence is made, adjusted for the threshold price which will be in force during the expected month of importation’. Since Regulation No 183/67 uses the expression ‘levy fixed in advance’ without defining it more precisely, it must be understood in the same sense as that in which it is used in the basic Regulation No 120/67, which Regulation No 183/67 is intended to implement.
10. Contrary to the contentions of the Commission, this legal situation was not altered by Article 9 of Regulation No 140/67, under which ‘If importation is not effected during the month indicated at the time of application … (a) the levy applicable on the day on which the application for the licence was submitted shall be adjusted in accordance with the threshold price in force on the day of importation …’. In fact, that provision — which is intended to meet the case in which importation is effected during the period of validity of the licence but during a month other than that indicated in the application for a licence — is not applicable to a case in which importation is not effected, or is only partially effected, during the period of validity of the licence, so that the deposit is wholly or partially forfeited. It cannot be accepted that the said provision altered the system laid down by Regulation No 120/67, especially since Regulation No 140/67, being an implementing regulation not directly based on Article 43 (2) of the Treaty but on the enabling provision of Article 15 (4) of Regulation No 120/67, could not have derogated from the provisions of the basic regulation to which it is subordinate.
11. In these circumstances it seems unnecessary to go into the conflicting arguments which have been put forward in the course of the procedure regarding the purpose of the provisions governing the detailed rules for fixing the amounts to be withheld in cases of failure to import, particularly as these arguments have given rise to widely divergent interpretations.
12. The expression ‘levy fixed in advance’ in the first indent of Article 8 (3) (b) of Regulation No 183/67 should therefore be interpreted as referring to the rate of levy fixed for the month of importation specified in the application by the holder of the import licence.
Costs
13. The costs incurred by the Government of the Kingdom of the Netherlands and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, costs are a matter for that court.
On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the parties to the mam action and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community; Having regard to Regulation No 120/67/EEC of the Council of 13 June 1967, Regulation No 140/67/EEC of the Council of 21 June 1967 and Regulation No 183/67/EEC of the Commission of 27 June 1967; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the questions referred to it by the Verwaltungsgericht Frankfurt am Main by order of 25 February 1970, hereby rules:
(I) Examination of the first question referred to the Court has revealed no factor capable of affecting the validity of the last subparagraph of Article 12 (I) of Regulation No 120/67/EEC of the Council of 13 June 1967 which makes the issue of import licences conditional on the lodging of a deposit guaranteeing the obligation to import during the period of validity of the licence;
(2) The expression ‘levy fixed in advance’ in Article 8 (3) (b) of Regulation No 183/67/EEC of the Commission of 27 June 1967 refers to the rate of levy fixed for the month of importation indicated by the holder of the import licence in his application.