JUDGMENT OF 28. 6. 1979 — CASE 217/78 CORMAN v HAUPTZOLLAMT AACHEN-SUD
In Case 217/78 REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Düsseldorf for a preliminary ruling in the action pending before that court between
THE COURT (First Chamber) composed of: J. Mertens de Wilmars, President of Chamber, A. O'Keeffe and G. Bosco, Judges, Advocate General: J.-P. Warner Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
1. Since it was impossible to dispose on normal market terms of all the butter stored with the intervention agencies of Member States and since it was necessary to avoid the high cost entailed in prolonged storage, the Commission, in Regulation No 1259/72 on the disposal of butter at a reduced price to certain Community processing undertakings (Official Journal, English Special Edition 1972 (II), p. 559) adopted measures permitting invervention agencies to sell butter at a reduced price to certain Community processing undertakings. Regulation No 1259/72, in order to ensure the proper operation of the system thus established, provides: To ensure that all purchasers have equal access, sales of butter at a reduced price must be effected by the intervention agencies by the tendering procedure; The tenderer may not take part in the invitation to tender unless he gives an undertaking in writing inter alia to comply with certain conditions regarding the composition and production of concentrated butter, the use thereof, the time within which such use must take place and obligations to be complied with where concentrated butter is resold.
2. Having regard to the experience gained in the application of that regulation the Commission on 30 January 1975 adopted new legislation, Regulation No 232/75 on the sale of butter at reduced prices for use in the manufacture of pastry products and ice-cream (Official Journal 1975, No L 24, p. 45). The provisions of that regulation repeat in essence those of the earlier regulation, Article 6 (1) establishes: The minimum fat content of the concentrated butter produced in an approved establishment after processing of the butter sold from storage by the intervention agencies (the products referred to under (a)); The additives to be incorporated in the butter in the course of such processing which is required to take place in the same establishment (products referred to under (b)); The products into which the abovementioned concentrated butter is to be processed. Such processing is identified with the ‘final’ destination of the stored butter which, after processing into concentrated butter with the addition of certain ingredients, is finally processed into specified products (listed under (c)). These products fall under heading 19.08 of the Common Customs Tariff (fine bakers' wares), ice-cream under subheadings 18.06 B and 21.07 and powdered products (other than powdered yoghourt) for the manufacture of the ice-cream under subheadings 18.06 D or 21.07; The period within which such final processing must take place (six months from the time when the butter is taken over by the successful tenderer); The duty of the tenderer to keep stock records enabling certain supervision to be effected. Article 6 (1) (f) provides finally that the tenderer shall undertake to include in the contract of sale, in the case of any subsequent resale of concentrated butter, the same requirements as those relating to the keeping of stock records and the use of the product. When the tenderer is awarded the butter from storage he becomes the ‘successful tenderer’: he ‘takes over’ the quantities of butter which have been awarded him and has a period of six months in which to complete the processing in accordance with the prescribed use. In order to ensure that the conditions prescribed by Article 6 (1) are complied with the regulation provides as follows: On the one hand (Article 12 (1)) the successful tenderer is to provide a ‘processing security’. Under Article 18 (2) that security ‘shall be released only for quantities in respect of which the successful tenderer has furnished proof’ to the competent agency ‘that the conditions laid down in Article 6 have been fulfilled’. Where the processing has been carried out in a Member State other than that of sale, proof may be furnished only by production of the control copy referred to in Article 17. On the other hand (Article 15) ‘from the time of its removal from store and until it is processed into one of the products specified in the two indents of Article 6 (1) (c), the butter shall be subject to customs or equivalent administrative control’. Finally, Article 20 amends the provisions of Article 20 of the earlier Regulation, No 1259/72. In that regulation in view of the fact that, in applying monetary compensatory amounts to importations into another Member State of butter from storage or concentrated butter, it was necessary to take account of the reduced value of such products it was provided that the monetary compensatory amounts normally applicable (Regulation No 974/71 of the Council) to butter, concentrated butter or butter with added sugar should be multiplied by a coefficient of 0,3. In Regulation No 232/75 that coefficient was fixed at 0,5 for all Member States except the United Kingdom for which it was 0,8.
3. The dispute which gave rise to the present case concerns the application of the reduced monetary compensatory amounts to consignments of concentrated butter imported into the Federal Republic of Germany in 1975 by S.A. Nicolas Corman & Fils (hereinafter referred to as ‘Corman’) which were manufactured from butter from storage and intended for the manufacture of fine bakers' wares and ice-cream. Initially the German customs authorities admitted such products into free circulation after payment of the reduced monetary compensatory amounts pursuant to Article 20 of Regulations Nos 1259/72 and 232/75. Later, however, the authorities entrusted with the customs or administrative control provided for in Article 15 of the two regulations found that proof had not been furnished that the use of the disputed consignments of concentrated butter resold by Corman was in accordance with the prescribed purpose.
4. The German customs authority therefore requested from the importer, by a ‘Steuerbescheid’ (notice of assessment) of 4 November 1976, payment of an additional sum corresponding to the difference between the monetary compensatory amounts normally payable and the reduced amounts originally paid. Corman's protest against that assessment was rejected and the dispute was brought before the Finanzgericht Düsseldorf. Since the Finanzgericht considered: On the one hand that an interpretation of Article 20 of the two regulations in question in the light of the objective pursued by the system thereby set up would logically lead to the taking into account of the ultimate use of the butter and permit withdrawal of the tariff advantage granted if it were shown that the butter was not used in accordance with its lawful purpose; and On the other hand that a strict interpretation of the relevant provisions, which is particularly necessary where such provisions make a concession, must lead to the interpretation of sale of butter or of concentrated butter within the meaning of Article 20 of the said regulations as meaning only sale across a frontier, that is to say the transactions concerning delivery by the exporter to the importer and not the whole commercial transaction beginning with the sale of concentrated butter up to the final use thereof by the ultimate consumer, it decided, by an order of 18 July 1978, to stay the proceedings and to refer the following questions for a preliminary ruling to the Court of Justice, pursuant to Article 177 of the EEC Treaty:
‘1) Are Article 20 of Regulation (EEC) No 1259/72 of 16 June 1972 (Official Journal, English Special Edition 1972 (II), p. 559) and Article 20 of Regulation (EEC) No 232/75 (Official Journal No L 24 of 31 January 1975, p. 45) to be interpreted as meaning that the definitive preferential levy treatment (reduction of the compensatory amounts) is subject only to the condition that the product be marketed in accordance with Articles 1 to 19 of the regulations or is there the further condition that the product be used in the manner prescribed by the regulations?
2) In the latter case: Is Article 20 of each regulation itself an independent provision allowing for the levy of a supplementary charge?’
5. The order making the reference was received at the Court on 29 September 1978. S.A. Nicolas Corman & Fils, represented by Dr Peter Wendt and H.-E. Heyn, Rechtsanwälte, and the Commission of the European Communities, represented by its Legal Adviser, Peter Gilsdorf, assisted by Jörn Sack, a member of its Legal Department, lodged written observations in accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC. Having heard the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to assign the case to the First Chamber, pursuant to Article 95 of the Rules of Procedure. It also decided to open the oral procedure after addressing a written question to the plaintiff in the main action.
II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
1. With regard to the first question SA. Nicolas Corman & Fils observes first that on both a common-sense and a systematic interpretation Article 20 of Regulation No 232/75 must be understood as making the (definitive) reduction of the monetary compensatory amount conditional upon the existence at the time of importation of a contract for sale which is in accordance with the provisions of Article 6 (1) (f) of the regulation. Common sense indicates that the fact that the products in question must be ‘sold pursuant to this regulation’ does not mean that they must be ‘sold and used’, merely that the contents of the contract of sale must be in accordance with the above-mentioned provisions. (This also applies to Article 20 of Regulation No 1259/72, since Regulation No 232/75 which replaced the latter is merely an interpretative provision and does not modify the law previously in force.) The systematic method of interpretation requires that, in construing the provision in question, regard must be had to the provisions of the regulations on the fixing of monetary compensatory amounts. According to Article 7 of Regulation No 1463/73 (Official Journal No L 146, p. 1) and Article 8 of Regulation No 1380/75 (Official Journal No L 139, p. 37) the day on which the customs authority accepts the document by which the declarant states his intention to import is decisive for the purposes of determining the monetary compensatory amount which can thus be dependent only on circumstances already in existence at the time of importation. This also applies to the reduction of the compensatory amount provided for in Article 20 of Regulation No 232/75 since the actual use to which the goods are put after their importation can have no effect on this point. Secondly, according to the settled case-law of the Court of Justice provisions making a derogation must be interpreted strictly and furthermore they must be clear and unequivocal. If it were the case that Article 20 had departed from the provisions of the regulations on monetary compensatory amounts not only as to determining the size of the monetary compensatory amount but also as to the principle of the decisive nature of the time of importation that should have been set out clearly and unambiguously in that same article. The judgment delivered by the Court of Justice in Joined Cases 99 and 100/76 ([1977] ECR 861) does not justify a different conclusion. That judgment is irrelevant to the present case since it concerns the interpretation of a provision (Article 18 of Regulation No 1259/72) whose nature is quite different from that of Article 20 of Regulation No 232/75. Accordingly it only remains to interpret Article 20 of Regulation No 232/75 in the light of its purpose. Regulation No 232/75 contains provisions dealing with two spheres with different objectives namely: The sale of butter at reduced prices for the manufacture of certain products (Articles 1 to 19), The compensation of monetary differences in intra-Community trade (Article 20). The reduction in the price of butter was in fact granted with a view to the objective pursued by the regulation, the attainment of which is guaranteed by a processing security. It is thus logical that release or forfeiture of that security should depend on the provision of proof that it has been used in accordance with the prescribed purpose and within the prescribed period. On the other hand the second sphere of the regulation concerns the system of monetary compensation. Since the monetary compensatory amounts are intended to counter-balance the effect of the monetary measures of the Member States on common prices when goods are in circulation and at the same time to avoid disorganization of the system of intervention in the Member States affected by monetary measures, their function is entirely independent of the actual use of the imported products. It is clear from the character of such compensation that it does not constitute either the imposition of a duty or the granting of a subsidy. Furthermore, Article 2 of Regulation No 974/71 and the second subparagraph of Article 4 (1) of Regulation No 1380/75 provide that monetary compensatory amounts are to be calculated on the basis of the common prices. The compensatory amount applicable is generally determined in accordance with the level of the common prices at the time of importation. The fixing of monetary compensatory amounts with regard to the destination of the products is thus contrary to the spirit of the provisions in question. The justification for Article 20 as a derogation from the rule that compensatory amounts are to be fixed on the basis of common prices is rather to be traced to the fact that the butter and concentrated butter mentioned in Regulation No 232/75 are not marketed on the basis of the common prices. This is made clear by the penultimate recital in the preamble to Regulation No 1259/72. The finding that the compensatory amounts are reduced in terms of the value of the product at the time of importation and not of its use nevertheless does not throw further light on the components which make up that value. The question must therefore be raised whether such a value derives solely from the purchase price agreed with the intervention agency or whether it is also necessary to take account of the processing security. Corman considers that the processing security does not form part of the conditions agreed for payment of the selling price. The notice of standing invitation to tender for the sale of butter at reduced prices for use in the manufacture of pastry products and ice-cream, published in Official Journal No C 25 of 3 February 1975, p. 1et seq., draws a clear distinction for example between the purchase price of butter and the processing security. According to that notice the purchase price is rather the price offered by the successful tenderer. It is certainly true that, where the security is forfeited, the total sum paid by the successful tenderer corresponds to the level of the market price for butter or, more exactly, to the sum of the price offered by that tenderer together with the amount of the processing security. However, this does not mean that in such a case the amount of the security is included in the price of the butter and retroactively raises that price to the market price or to a higher level. It follows from the foregoing that, in accordance with the provisions of Regulation No 232/75, the purchaser in the importing Member State is required in the purchasing of the butter or concentrated butter to pay only a price which corresponds to the reduced price of the butter. The forfeiture of the processing security is always at the expense of the successful tenderer and not of the person acquiring the butter. The security is thus provided only in the Member State in which the intervention agency in question is established. It is not provided by the importing Member State to the other Member State in question. Consequently, since the processing security does not form part of the price of the butter the reduction in the monetary compensatory amount must also remain unaffected if the goods are not used in accordance with the purpose laid down or within the prescribed periods in the importing Member State. That consideration cannot be countered by the argument that the successful tenderer can pass the amount of the (forfeited) security on to the purchaser. That course is prevented by competition and other factors. In all cases where the butter is used late or contrary to the prescribed purpose, the successful tenderer can claim damages and interest only under private law. Such claims cannot affect the size of the monetary compensatory amount. Because the system of monetary compensatory amounts is intended only to compensate for differences in rates in respect of prices and not of any right to damages and interest; Because any right to damages and interest could arise only after importation; Because such a right is subject to further conditions (for example the existence of breach of contract) which are not necessarily present when a processing security is forfeited. For all those reasons the reduction of the monetary compensatory amount must thus remain unaffected if the goods are not used in accordance with the purpose laid down or within the prescribed period in the importing Member State. In support of this argument Corman further points out that where, for example, butter at a reduced price was imported into a Member State with a soft currency, it would have been necessary under Article 20 of Regulation No 232/75 to grant a reduced monetary compensatory amount which certainly cannot be considered as a ‘subsidy’. In the present case the butter which was bought at a reduced price was first exported from the Federal Republic of Germany into Belgium with a reduced monetary compensation before it was re-imported into Germany. If the fact that the butter was put to a use at variance with the prescribed purpose necessarily entails the imposition of the normal monetary compensation on re-importation into Germany it must also lead retroactively to the granting of the normal compensatory amount on exportation into Belgium. That consequence entails manifest disadvantages. Furthermore, since the period laid down in Article 15 of Regulation No 1380/75 with regard to the granting of monetary compensatory amounts on exportation corresponds exactly to the period for processing prescribed in Article 6 (1) (d) of Regulation No 232/75 it is not clear how the person concerned could receive retroactively a normal compensatory amount, especially when the processing was late. The German customs administration is aware of those difficulties and has stated that it is prepared in principle to make a payment, in respect of the exportation of butter purchased at a reduced price, of the difference between the reduced compensatory amount and the normal compensatory amount. On the other hand if it were the case that the reduction in the monetary compensatory amount also depends on proof that the butter has been used in accordance with the purpose laid down and within the prescribed period Regulation No 232/75 would have had to make additional provision for a security for such reduction. The said regulation did not establish any security of that nature. Finally, even if it is supposed that this matter still remains in doubt, regard must be had to the principle of interpretation whereby, where there is uncertainty, justice demands that the final reduction of the monetary compensatory amount must be made to depend exclusively on the conditions which are least burdensome for traders on the market in question. If, contrary to the argument on this point, it were declared that the processing security forms part of the sale price of the butter so that loss of the security retroactively entails an increase in that price at all stages of marketing it would, also be necessary to concede that the application of the monetary compensatory amount cannot depend either directly on the actual use of the product but at the most on the treatment of the processing security. Forfeiture of the security entails the removal of the reason for the reduction in the monetary compensatory amounts. If on the other hand the security were released the monetary compensation would remain at the same level. Turning next to the second question Corman, considering that a reply should be given given if the Court were to rule that the final reduction of the monetary compensatory amount depends on the treatment of the processing security, notes that Community law also recognizes the principle that charges imposed upon any person must be clearly laid down by the provisions in question. Article 20 makes no provision for a notice of re-assessment relating to the amount of the difference where the butter is used too late or such use is contrary to the prescribed purpose and thus does not constitute an independent power to effect such a re-assessment. Moreover the Member States are in addition unable to rely on the provisions of national customs law by reason of the fact that, as is made clear in Articles 6 and 7 of Regulation No 1380/75, such provisions do not apply to monetary compensatory amounts. On the basis of those considerations Corman accordingly suggests that the reply to the questions submitted should be as follows: (1) The provisions of Article 20 of Regulation No 1259/72 and of Regulation No 232/75 must be interpreted to mean that the sole condition for the reduction in the monetary compensatory amount is that the importation or exportation should be effected under a contract of sale in which the seller transfers to the purchaser the obligations concerning processing under Article 6 of the two regulations and binds the latter, in the event of resale, to transfer the obligations concerning processing to persons purchasing from him. Use of the goods in accordance with the purpose laid down and within the prescribed period is irrelevant. (2) In the alternative: The provisions of Article 20 of Regulation No 1259/72 and of Regulation No 232/75 must be interpreted to mean that the reduction in the monetary compensatory amount depends both on the existence of a contract of sale at the time of the importation or exportation whereby the seller transfers to the purchaser the obligations concerning processing under Article 6 and binds the latter, in the event of resale, to transfer such obligations to persons purchasing from him, and on the release of the processing security. (3) If the reply is in accordance with Point 2 above: Article 20 of the two regulations does not constitute an independent provision empowering a reassessment to be made. The Member States are not authorized to re-assess the difference in relation to the normal compensatory amount on the basis of their national customs provisions.
2. The Commission first observes, with regard to the first question, that neither Article 20 of Regulation No 1259/72 nor Article 20 of Regulation No 232/75 provides a basis for the conclusion that the transfer of goods in accordance with the provisions of those regulations is sufficient for the granting of a final reduction in the monetary compensatory amount. Article 20 of Regulation No 232/75 states that the products in question are those ‘sold pursuant to this regulation’. The sale in question is thus not a clearly specified operation forming part of a series of legal steps extending from the sale of the butter by the intervention agency to its use for the manufacture of pastry products or ice-cream. It is not necessary that the sale should be with a view to export. It is not a purely commercial operation since the sale is effected subject to the condition that the butter is in fact used for the purpose intended. In conclusion the concept of sale here covers the entire economic process extending from the sale of the butter by the intervention agency up to its final use. An interpretation, without regard to the surrounding circumstances, whereby the sale by the intervention agency must in itself suffice, irrespective of the subsequent use of the concentrated butter, to obtain a final reduction in the monetary compensatory amounts would in fact constitute an incitement to abuse. Even a successful tenderer acting in bad faith would then have an assurance that he would pay in respect of butter purchased at a reduced price only a monetary compensatory markedly lower than the normal amount whilst he would not suffer excessively from the forfeiture of the processing security which merely covers the difference between the reduced price and the normal market price of the butter. Such a situation would give rise to serious disturbances in the market in butter which Regulations Nos 1259/72 and 232/75, as it is stated in their recitals, are in fact concerned to prevent. The argument put forward by the Commission is furthermore confirmed by the wording of other provisions of Community law. The differences in the wording used in adopting the various regulations governing the same subject-matter show that in interpreting those regulations it is impossible to accord prime importance to the terms of such provisions. On the contrary the spirit and objective of the rules are decisive for their interpretation and application. Such a criterion moreover leads to an interpretation of Article 20 of both regulations to the effect that the reduction in the monetary compensatory amount is only obtained conditionally. If this were not so it would be impossible to prevent abuses, even the most flagrant. In support of this interpretation it is also possible to refer to the fact that the goods are subject to customs or administrative control until their final use. When such control shows that the goods were used for objectives at variance with the intended purpose it must be possible for such a situation to be followed by the appropriate consequences in respect not only of the processing security but also of the compensatory amounts. Since the importer is aware that such control is permanent he cannot assert that he failed to reckon that a re-assessment might be made and that his expectation that the reduction was final should be safeguarded. The re-assessment is not excluded merely because the use at variance with the purpose was by subsequent purchasers since in that case no administrative control would be necessary. According to the Commission the importer can moreover pass on (for example through a contractual provision) the supplement to the monetary compensatory amount which he has been obliged to pay to the purchaser who has failed to use the goods in accordance with the purpose. Where the importer does not take such steps for his protection he must bear the consequences. The principles applicable to monetary compensatory amounts are thus the same as those which apply to the forfeiture of the processing security in connexion with which the Court of Justice has already ruled that the successful tenderer cannot rely on the circumstance that it was not he himself but a subsequent purchaser who used the goods for ends at variance with the purpose. It is necessary before concluding to deal briefly with the argument that, if the goods had been imported into a Member State with a soft currency, the Commission's interpretation would logically lead to the grant, where the goods were used in a manner' not in accordance with their purpose, of the difference between the reduced monetary compensatory amount granted at the time of importation and the normal monetary amount. This line of argument completely disregards the spirit and objective of Regulations Nos 1259/72 and 232/75. Since the precise aim of those regulations is to prevent any use of the goods other than that prescribed there can be no question of approving behaviour contrary to the objective pursued by the grant a posteriori of the entire monetary compensatory amount. Turning to consider the second question the Commission observes that it has a scope somewhat wider than that indicated by its terms. Since Corman maintains that neither Community law nor national law provides legal grounds for recovery of monetary compensatory amounts in situations such as that in the present case the question whether there is a legal basis for such recovery must be viewed in entirely general terms, not merely within the restricted context of Article 20 of Regulations Nos 1259/72 and 232/75. Furthermore, if it were possible to find an appropriate legal basis in Community law national law would no longer be of any relevance in this respect. If the Commission's argument is accepted, that is, if Article 20 of Regulations Nos 1259/72 and 232/75 merely accords a temporary benefit conditional upon the use of the butter for the pre scribed purposes, it will be found that the legal basis for the refund does not rest on the provisions granting the abovementioned benefit but on the provisions establishing the monetary compensatory amounts which are normally imposed on importations, that is, in the present case, on the provisions of the Commission regulation fixing the monetary compensatory amounts in force at the time when the importation is effected. It is significant in this connexion that those provisions do not state that a reduced amount other than the normal monetary compensatory amount shall be applied to the butter in question but in fact state that ‘that amount shall be multiplied by a coefficient’. This amounts to stating that the normal compensatory amount remains applicable and that it is to be reduced (provisionally) only through the coefficient. If the reason for the reduction were to prove to be absent the entire amount would automatically be applicable again under the rule that a general provision becomes applicable as soon as a provision containing a derogation ceases to apply. The present case differs solely by the fact that the normal monetary compensatory amounts remain applicable after the formalities for the importation of the goods have been completed and the monetary compensatory amount has actually been collected. However, since in such cases the reduction is granted purely because the person concerned undertakes to put the goods, which are furthermore subject to control, to a specific purpose it is clear that the operation in question is not definitively concluded by the completion of the import formalities. Since Community law thus provides a legal basis for a re-assessment of the difference between the reduced compensatory amount and the normal amount any reference to provisions of national law is irrelevant. On the basis of those observations the Commission suggests that the reply to the questions submitted should be as follows: 1. Article 20 of Regulations (EEC) No 1259/72 and 232/75 must be interpreted to mean that it confers the benefit of a reduction in monetary compensatory amounts only on condition that the goods are used in accordance with those regulations. This also applies when the goods are resold by the importer in accordance with Article 6 (1) (e) of Regulation No 1259/72 or Article 6 (1) (0 of Regulation No 232/75 after the completion of the customs formalities. 2. The provisions of the Commission regulations fixing the monetary amounts constitute the legal basis for the imposition of the normal monetary compensatory amount where the goods are used for purposes at variance with the regulation applicable.
III — Oral procedure
Corman, represented by E. Heyn, and the Commission of the European Communities, represented by Jörn Sack, acting as Agent, presented oral argument at the hearing on 3 May 1979.
The Advocate General delivered his opinion in the course of the same hearing.
Decision
1. By an order of 18 July 1978, which was received at the Court of Justice on 29 September 1978, the Finanzgericht Düsseldorf submitted to the Court of Justice under Article 177 of the EEC Treaty two preliminary questions on the interpretation of Regulation (EEC) No 1259/72 of the Commission of 16 June 1972 on the disposal of butter at a reduced price to certain Community processing undertakings (Official Journal, English Special Edition, 1972 (II), p. 559) and of Regulation (EEC) No 232/75 of the Commission of 30 January 1975 on the sale of butter at reduced prices for use in the manufacture of pastry products and ice-cream (Official Journal 1975 No L 24, p. 45).
2. These questions were raised in the course of an action between the customs authorities of the Federal Republic of Germany and an importer of butter from Belgium concerning the application to that butter of the tariff provisions laid down in Article 20 of the above-mentioned Regulations Nos 1259/72 and 232/75.
3. The German customs authorities first charged on the importations of that product, which was produced from butter from storage and intended for the manufacture of fine baker's wares and ice-cream in accordance with the provisions of Regulations Nos 1259/72 and 232/75 the reduced monetary compensatory amounts provided for in Article 20 of those regulations and subsequently, by a notice of corrective assessment, charged in respect of the importations a sum equal to the difference between those reduced amounts and the amounts normally applicable outside the system established by the said regulations.
4. In stating the reasons for the corrective assessment the German authorities claimed that, since the butter in question had not been put by the final user to the use prescribed in the above-mentioned regulations, it could not qualify for the reduced compensatory amounts fixed by the said article and that it became liable to the monetary compensatory amounts prescribed for butter freely marketable without restrictions as to its use.
5. The plaintiff in the main action objects inter alia that there is no legal basis for such corrective assessment since Community law, in particular Regulations No 1259/72 and No 232/75, do not contain any independent provisions which authorize the subsequent recovery of the difference between the normal rate and the reduced rate of the compensatory amounts initially applied to the product where it is diverted from its destination laid down by law.
6. In order to have this point clarified the Finanzgericht Düsseldorf has referred the following questions to the Court of Justice:
‘1) Are Article 20 of Regulation (EEC) No 1259/72 of 16 June 1972 (Official Journal, English Special Edition 1972 (II), p. 559) and Article 20 of Regulation (EEC) No 232/75 (Official Journal No L 24 of 31 January 1975, p. 45) to be interpreted as meaning that the definitive preferential levy treatment (reduction of the compensatory amounts) is subject only to the condition that the product be marketed in accordance with Articles 1 to 19 of the regulation or is there the further condition that the product be used in the manner prescribed by the regulation?
2) In the latter case: Is Article 20 of each regulation itself an independent provision allowing for the levy of a supplementary charge?’
7. Since the questions are related they should be considered together.
8. The first paragraph of Article 20 of Regulation No 1259/72 of the Commission provides that: Article 20 (1) (a) of Regulation No 232/75 of the Commission provides that These provisions must be interpreted within the framework not only of the regulations of which they form part but also of the general rules governing the arrangements for monetary compensatory amounts.
‘The compensatory amounts applicable to butter, concentrated butter and concentrated butter with added sugar …, for the part consisting of butter, shall be equal to the compensatory amounts fixed pursuant to Regulation (EEC) No 974/71, multiplied by a coefficient of 0,3’.
‘When that part of the butter and concentrated butter specified in Article 6 (1) (a) and (b) which consists of butter is sold pursuant to this regulation:
a) the compensatory amounts fixed pursuant to Regulation (EEC) No 974/71 shall be multiplied by the coefficient 0,5; however, in the case of the United Kingdom the coefficient shall be 0,8’.
9. Regulation No 1259/72 lays down measures of conjunctual economic policy intended to promote the disposal of butter from storage, the prolonged storage of which entails high costs for the agricultural intervention agencies. It promotes such disposal by making provision, through arrangements for standing invitation to tender, for the sale of butter from storage at a reduced price by the agricultural intervention agencies to butter-processing undertakings in the Community, whereby the successful tenderer undertakes to process the butter purchased into concentrated butter having the composition specified in Article 6 (1) (b) and not to use it or to ensure that it is not used otherwise than for the manufacture of the products in heading 19.08 of the Common Customs Tariff. In order to ensure that the butter thus disposed of is used in accordance with that purpose and that it is not freely marketed the regulation establishes a system of supervision entailing the provision of a processing security, to be released on the conditions set out in Articles 18 and 19 of the regulation.
10. That regulation has undergone a number of amendments which have not, however, affected the basic principles governing the system which it established. Regulation No 232/75 is, as is made clear by the penultimate recital in the preamble thereto, solely concerned, in the interests of clarity and efficient administration, to consolidate these provisions concerning butter for use in the manufacture of pastry products and ice-cream.
11. Multiplication, in accordance with Article 20 of the said regulations, by a correcting coefficient which applies to butter from storage sold on the abovementioned conditions compensatory amounts considerably less than those normally applied to butter under Regulation No 974/71, does not constitute one of the above-mentioned measures intended to promote the disposal and marketing of butter from storage but forms part of the general rules set out in Regulation (EEC) No 974/71 of the Council of 12 May 1971 (Official Journal, English Special Edition 1971, (I), p. 257).
12. It is in fact clear from those rules, in particular from Article 2 of that regulation, that the fixing of monetary compensatory amounts is based inter alia on the prices of the products in question. The penultimate recital in the preamble to Regulation No 1259/72, which states that ‘as regards the compensatory amounts fixed pursuant to Council Regulation (EEC) No 974/71 of 12 May 1971 … account should be taken of the value of the products concerned’, clearly refers to the principle underlying that provision whereby compensatory amounts must be adjusted on the basis of the prices of the products in question, representing their market value.
13. It is in implementation of those rules that Article 20 of both Regulation No 1259/79 and of Regulation No 232/75 makes provision, with regard to the butter and concentrated butter referred to in Article 6 (1) of the regulations, for the application of a reduced monetary compensatory amount because, having regard to the restrictions on marketing to which that product is subject to its market value, and consequently its price, are proportionately reduced.
14. It is in accordance with the same principle for the competent customs authorities to re-assess the reduced compensatory amounts if the products in question have been diverted from their destination or if they have not been used in accordance therewith within the period prescribed by Article 6 of Regulations No 1259/72 and No 232/75. In fact, in so far as the importer has failed to furnish proof within the above-mentioned period that the goods have reached the destination which was made a condition of the reduction of the compensatory amounts, the goods cannot be considered as having the conventional value attributed to them om the basis of the minimum selling price referred to in Regulations No 1259/72 and No 232/75 and they must be considered as butter sold at the normal market price. In that case the competent customs authorities are required under Regulation No 974/71 of the Council to apply the compensatory amounts laid down for butter marketed at such a price and thus to re-assess the reduced compensatory amounts which were initially applied. Since that re-assessment has regard to the market price of the products in question its legal basis is to be found in the general rules themselves which govern the application of monetary compensatory amounts.
15. For these reasons the reply to the questions submitted must be that the definitive application of the reduced monetary compensatory amounts provided for by Article 20 of Regulation (EEC) No 1259/72 of the Commission of 16 June 1972 and in Article 20 of Regulation (EEC) No 232/75 of the Commission of 30 January 1975 pre-supposes that the goods in question, having regard in particular to the use to which they are to be put, have the reduced value attributed to them by virtue of those regulations. In so far as the importer has not furnished the proof, within the period prescribed in Article 6 of the said regulations, that the goods have been put to the use to which the reduction of the compensatory amounts is subject, the legal basis for the subsequent re-assessment of such amounts is to be found in the general rules governing the system of monetary, compensatory amounts, as established by Regulation No 974/71 of the Council of 12 May 1971.
Costs
16. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.
On those grounds, THE COURT (First Chamber), in answer to the questions referred to it by the Finanzgericht Düsseldorf by an order of 18 July 1979, hereby rules: