C-23/79

JUDGMENT OF 27. 9. 1979 — CASE 23/79 GEFLÜGELSCHLACHTEREI FREYSTADT v HAUPTZOLLAMT HAMBURG-JONAS

CELEX: 61979CJ0023
Datum: 1979-09-27
Källa: eur-lex.europa.eu

In Case 23/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court], Munich, for a preliminary ruling in the action pending before that court between:

THE COURT composed of: H. Kutscher, President, J. Mertens de. Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco, A. Touffait and T. Koopmans, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and procedure

1. In the summer of 1973 the plaintiff in the main action, under contracts which had been made with undertakings established in Austria and Liechtenstein, exported broiling chickens which had orginated within the Community and fell within subheading 02.02 A. I. (b) of the Common Customs Tariff, and which had been in free circulation in the Federal Republic of Germany. These goods were forwarded via Austria and Czechoslovakia under the accompanying document procedure (in other words, without being given customs clearance for release into free circulation), and subsequently delivered to customers in the German Democratic Republic. The goods fall within the common organization of the market in poultrymeat (Article 1 (1) (b) of Regulation No 123/67/EEC of the Council of 13 June 1967 on the common organization of the market in poultry-meat (Official Journal, English Special Edition 1967, p. 63), replaced by Regulation No 2777/75 of the Council of 29 October 1975 of the common organization of the market in poultry-meat (Official Journal L 282, p. 77). Article 9 of Regulation No 123/67 lays down rules for the system of refunds. It provides that to the extent necessary to enable the products in question to be exported on the basis of prices for those products on the world market, the difference between those prices and prices within the Community may be covered by an export refund (paragraph (1)); the refund may be varied according to destination and is to be granted only on application by the party concerned (first and second subparagraphs of paragraph (2)). According to the regulations of the Commission in force at the time the goods in question were exported, the rate of the refund was the same for every country of destination. On 7 September 1973 the plaintiff applied to the Hauptzollamt Hamburg-Jonas (hereinafter referred to as ‘the Hauptzollamt’) for an export refund in respect of the delivery of these goods. By a decision of 2 October 1973 the Hauptzollamt fixed this refund at a total of DM 33127.72 and by a decision of 4 October 1973 it fixed the monetary compensatory amounts in respect of the above-mentioned exports at DM 10259.11. By a decision of 24 July 1975 the Hauptzollamt reclaimed the export refund and the monetary compensatory amounts on the ground that the goods were released for consumption on the territory of the German Democratic Republic and that this was not a non-member country within the meaning of the provisions on the common organization of the agricultural markets. On 6 August 1975 the plaintiff lodged an objection against those decisions which was rejected by the defendant on 2 October 1975 as being unfounded. On 21 October 1975 the plaintiff brought an action before the Finanzgericht [Finance Court] Hamburg, which dismissed the claim in a judgment on 8 March 1977. When the case was brought before it on an appeal on a point of law the Bundesfinanzhof decided on 9 January 1979, after inviting the Federal Minister of Finance to intervene in the main proceedings by an order dated 16 August 1978, to stay the proceedings and to refer the following questions to the Court of Justice of the European Communities for a preliminary ruling: 1. Does the concept of exportation within the meaning of Regulation No 123/67/EEC (especially Article 9), Regulation No 176/67/EEC (especially Articles 4 and 6) and Regulation No 1041/67/EEC (especially Articles 3 (1), 4 (1) and 8) presuppose that the goods were or would be put into free circulation at their destination even if the rates of refund for the goods are not varied according to the destinations? 2. If the answer to Question 1 is in the affirmative: must Article 9 of Regulation No 123/67/EEC, Article 6 of Regulation No 176/67/EEC and Articles 4 and 8 of Regulation No 1041/67/EEC in conjunction with the Protocol on German Internal Trade and connected problems be interpreted as meaning that goods coming within Article 1 of Regulation No 123/67/ EEC, which, after being sold to a contracting party outside the Community, having been in free circulation in the Community, left the geographical territory of the Community on 28 and 30 August 1973, were delivered to the German Democratic Republic via the territory of non-member countries without being transhipped and remaining under customs control and were declared for home use in that country, benefit from refunds on exports to non-member countries?

2. As noted above, Article 9 of Regulation No 123/67 lays down the basic principles of the system of granting export refunds in the sector of poultry-meat. Article 4 of Regulation No 176/67 of the Council of 27 June 1967 laying down general rules for granting export refunds on poultry-meat and criteria for fixing the amount of such refunds (Official Journal, English Special Edition 1967, p. 144) provides that: Article 6 of Regulation No 176/67 provides that: Article 3 (1) of Regulation No 1041/67 of the Commission of 21 December 1967 on detailed rules for the application of export refunds on products subject to a single price system (Official Journal, English Special Edition 1967, p. 323) provides that: and Article 8 of the same regulation provides in particular that for the application of the first subparagraph of Article 6 (2) of Regulation No 176/67 the party concerned must submit certain documents listed therein. The first paragraph of the Protocol on German Internal Trade and connected problems provides that:

‘Where the world market situation or the specific requirements of certain markets makes this necessary, the refund for the Community may be varied according to the destination of the products listed in Article 1 (1) of Regulation No 123/67/EEC’.

‘(1). The refunds shall be paid upon proof:

That the products have been exported from the Community, and

That the products are of Community origin, except where Article 7 applies.

(2). Where Article 4 applies, the refund shall be paid under the conditions laid down in paragraph (1), provided it is proved that the product has reached the destination for which the refund was fixed.

Exceptions may be made to this rule in accordance with the procedure referred to in paragraph (3), provided conditions are laid down which offer equivalent guarantees.

…’.

‘(1). The refund shall be paid only upon proof that the product in respect of which customs formalities have been completed:

Has left the geographical territory of the Community unaltered, in the case referred to in Article 1

…’

‘Since trade between the German territories subject to the Basic Law for the Federal Republic of Germany and the German territories in which the Basic Law does not apply is a part of German internal trade, the application of this Treaty in Germany requires no change in the treatment currently accorded this trade.’

3. The Bundesfinanzhof is of the opinion that the legality of the decision reclaiming the refunds and the compensatory amounts depends primarily on the answer to the question whether the conditions for granting those sums were fulfilled, which requires the interpretation of a number of provisions of Community law. It notes, first, that the concept of exportation to non-member countries within the meaning of Article 9 of Regulation No 123/67 must be interpreted in the same way as that referred to in Article 20 of Regulation No 19/62 of the Council of 4 April 1962 (Journal Officiel 1962, p. 933). That concept, according to the judgment of the Court on 27 October 1971 in Case 6/71 (Rheinmühlen Düsseldorf v Einfuhr- und Vorratsstelle fur Getreide und Futtermittel [1971] 2 ECR 823) presupposes at least that the goods have been or will be put into free circulation in a non-member country. Doubts as to the accuracy of this interpretation may arise, however, on reading Regulation No 176/67, which lays down the basic rules for the grant of refunds on the exportation of poultry-meat. Article 6 (1) of the regulation provides that the refund is to be paid upon proof that the products have been exported from the Community; it is only in cases where, under Article 4 of the regulation, the amount of the refund is varied according to the country of destination of those products, that Article 6 (2) provides that payment of the refund is subject to proof that the product has reached the country of destination for which the refund was fixed. It is possible, however, that those provisions concern only certain requirements as to proof which are not listed completely and that, consequently, they do not define the basic concept of exportation. The Bundesfinanzhof goes on to point put that at the time of the events in question the refund system was also covered by Regulation No 1041/67 on detailed rules for the application of export refunds on products subject to a single price system. Under Article 3 (1) of that regulation payment of the refund is conditional upon proof that the product has left the geographical territory of the Community, and Article 8 regulates the case referred to in the first subparagraph of Article 6 (2) of Regulation No 176/67 (varying rates of refund according to destination). In addition Article 4 of Regulation No 1041/67 provides that in certain cases Member States may require as a condition for payment of the refund proof not only that the product has left the geographical territory of the Community, but also that the product in question has been imported into a non-member country and, where appropriate, proof of the conditions under which it was imported. According to the judgment of the Court of 2 June 1976 in Case 125/75 (Milch-, Fett- und Eier-Kontor GmbH v Hauptzollamt Hamburg-Jonas [1976] 1 ECR 771), that provision is of general application and applies in all cases where there is a refund. Those rules, too, may be held to contain no specific definition or even amendment of the concept of exportation contained in Regulation No 123/67. If the answer to this question is in the affirmative, continues the Bundesfinanzhof, it is necessary to decide whether the fundamental condition for granting a refund and compensatory amounts, that is to say, release into free circulation in a non-member country, has been fulfilled in the present case. It considers that in the judgment of the Court delivered on 1 October 1974 in Case 14/74 (Norddeutsches Vieh- und Fleischkontor GmbH v Hauptzollamt Hamburg-Jonas [1974] 2 ECR 899) it was decided that the rules laid down in the Protocol on German Internal Trade and connected problems of 25 March 1957 are intended only to relieve the Federal Republic of Germany of the obligation to apply the rules of Community law to German internal trade; the dispensation thus granted does not have the result of making the German Democratic Republic part of the Community, but means only that a special system applies to it as a territory which is not part of the Community; the importation of the goods into the Federal Republic of Germany under the Protocol cannot therefore be regarded as importation from a non-member country since it is German internal trade (paragraph 6 of the decision). Under the Protocol, the German Democratic Republic is neither a Member State of the European Economic Community nor, as regards German internal trade, a non-member country, but is subject to special rules (paragraph 8 of the decision). However, as Case 14/74 concerns the movement of goods from the German Democratic Republic to the Federal Republic of Germany, the Bundesfinanzhof considers that that judgment cannot readily be applied to the case at issue before it.

4. The order of the national court was lodged at the Court Registry on 5 February 1979. In pursuance of Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted on 2 April 1979 by the Commission of the European Communities, represented by its Legal Adviser, P. Kalbe, acting as Agent, on 20 April 1979 by the plaintiff in the main action, represented by Mr Landry of the Hamburg Bar, and on 26 April 1979 by the Government of the Federal Republic of Germany, represented by Dr Seidel, Ministerialrat [Ministry Adviser] in the Federal Ministry of Economic Affairs. Upon 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.

II — Written observations submitted to the Court

A — Observations submitted by the plaintiff in the main action

As to the facts of the case, the plaintiff in the main action states that it is not disputed that it sold and delivered goods at the world-market price to buyers established in a non-member country other than the German Democratic Republic and that it passed on the refunds and monetary compensatory amounts to the buyers in the form of a price reduction; the merchandise reached the German Democratic Republic without there having been any contractual relationship between the plaintiff and the second buyer.

The plaintiff suggests that the first question referred to the Court for a preliminary ruling should be divided into two parts. The first subsidiary question is whether Article 9 of Regulation No 123/67, Articles 4 and 6 of Regulation No 176/67 and Articles 3, 4 and 8 of Regulation No 1041/67 are to be interpreted as meaning that where the refund rates have not been fixed at different levels depending on the destination of the exported products, proof must be submitted that the products have reached or been imported into a non-member country in addition to the proof that the products have left the geographical territory of the Community unaltered. The second subsidiary question is whether, if the reply to the first part is in the affirmative, the provisions should be interpreted as meaning that the goods must be put into free circulation in the country of destination, even if the refund rates are uniform.

The plaintiff in the main action claims that the above-mentioned provisions should be interpreted as meaning that where the refund rates are not varied, it is sufficient to prove that the goods have left the geographical territory of the Community unaltered.

It criticizes the conclusion drawn by the Bundesfinanzhof from the judgment delivered by the Court in Case 6/71 and claims that the concepts of exports used in Regulation No 123/67 and Regulation No 19/62 respectively are not the same and therefore the above-mentioned judgment of the Court concerning the concept of ‘exports to third countries’ as used in Regulation No 19/62 cannot be extended to the concept of ‘exports’ within the meaning of Article 9 of Regulation No 123/67. Case 6/71 did not deal with the concept of ‘exportation’ but the concept of ‘exports to third countries’ and the definition thereof in relation to the other concept, also used in Regulation No 19/62, of ‘exports to a Member State’. Those proceedings concerned the case where refund rates had been fixed which varied according to the differences in prices on the export markets in question; it was for this reason that the Court held that payment of the refunds for exports to non-member countries was subject to proof of importation into a non-member country. The decision in Case 125/75 was merely the logical extension of the principle established in Case 6/71.

In the present case, however, the Court is not asked to define two concepts of export, on the one hand ‘exports to third countries’ and on the other ‘exports to a Member State’ and the refund rates are not varied according to the destination of the products in question. In the circumstances it would be more correct to define the concept of exports within the meaning of Article 9 of Regulation No 123/67 in the light of the provisions of Regulations No 176/67 and 1041/67.

The content of Regulation No 176/67 is particularly important because this regulation was also issued by the Council because, according to its title, it lays down general rules for granting export refunds on poultry-meat and because its adoption was already envisaged in the fourth subparagraph of Article 9 (2) of Regulation No 123/67. Article 4 of Regulation No 176/67 provides that the refund may be varied according to the destination of the products exported. Where that is the case, the refund is to be paid only upon proof that the products have actually reached the destination for which the refund was fixed (first subparagraph of Article 6 (2). In every other case the refund is to be paid upon proof that the products have been exported from the Community (Article 6 (1)). Thus proof that the exported products have reached the destination for which the refund was fixed is required only in the case of non-uniform refunds.

Provision for exceptions to the rule in the first subparagraph of Article 6 (2) is made in the second subparagraph: it was on the basis of this, together with Article 6 (3), that the Commission adopted Regulation No 1041/67, which must be interpreted strictly. According to the ninth recital in the preamble to Regulation No 1041/67 where the rate of the refund is varied according to the destination of the exported products, proof must be furnished that the product has reached the destination for which the refund was fixed. This solution corresponds to the first subparagraph of Article 6 (2) of Regulation No 176/67. Article 4 (1) of Regulation No 1041/67 states that in certain cases, in particular by reason of the nature of the export markets and thus wherever the rate of refund must be varied owing to the specific requirements of certain markets (Article 4 of Regulation No 176/67), Member States may require, as a condition for payment of the refund, proof not only that the product has left geographical territory of the Community, but also that the product in question has been imported into a non-member country. Moreover, Regulation No 1041/67 makes payment of the export refund likewise subject to proof only that the product has left the geographical territory of the Community unaltered (Article 3 (1) of Regulation No 1041/67).

If the Court is unable to accept the principal argument put forward by the plaintiff in the main action, then the plaintiff argues that it has never been a condition that the goods should be put into free circulation in the country of destination. According to the plaintiff neither Regulations Nos 123/67 and 176/67 of the Council, nor Regulation No 1041/67 of the Commission, expressly require that they enter free circulation. Only in Article 4 (1) of Regulation No 1041/67 is the possibility mentioned of Member States' requiring ‘in certain cases’ proof that the product has been imported into a non-member country and proof of the conditions under which it was imported. Those regulations, especially Regulation No 1041/67, differ appreciably from subsequent regulations, in particular Regulation No 192/75, which replaced Regulation No 1041/67. Prior to the adoption of Regulation No 192/75 the relevant provisions of Community law did not require proof that the product had been put into free circulation in a non-member country, and certainly not where the refunds were the same for all non-member countries. The judgment delivered by the Court in Case 125/75 must be interpreted, on the basis of a contrario reasoning, to the effect that where the rate of refund is uniform, it is not necessary for the goods to have been put into free circulation in the country of destination.

The plaintiff in the main action claims also that the objective of the refund has been achieved in the present case. It sold the goods in question at the world market price and the refunds and monetary compensatory amounts were passed on ipso facto to the buyers in the form of a price reduction. The meaning and purpose of the refunds and the monetary compensatory amounts, which are intended to reduce the price of Community products' to the level of world market prices in order to make it possible for them to be exported, has therefore been respected.

As to the second question, the plaintiff in the main action claims that the facts that the goods in question were forwarded to the German Democratic Republic without having been put into free circulation in Austria and in Czechoslovakia does not damage its claim to the grant and payment of refunds and monetary compensatory amounts. Forwarding of this kind is possible in connexion with almost any exportation to non-member countries, but none of the relevant provisions raises any objection to the grant of a refund. In the present case the refunds were not fixed particularly with regard to the special conditions of the internal markets in certain non-member countries (the Austrian market in particular), nor were they designed to compensate for import duties in certain non-member countries (Austria in particular). According to the plaintiff the meaning and purpose of the refunds and the monetary compensatory amounts have been respected.

The plaintiff in the main action claims that the Protocol on German Internal Trade and connected problems of 25 March 1957 precludes any other reply. According to the judgment delivered by the Court in Case 14/74 this Protocol must be interpreted strictly. In the plaintiffs opinion its claim to refunds and to monetary compensatory amounts can be refused only if it delivered the goods to the German Democratic Republic ‘under the Protocol as part of German internal trade’. That is not the case in the present instance since it sold and delivered the goods in question to a buyer established in a non-member country other than the German Democratic Republic; the transaction had nothing whatsoever to do with German internal trade.

Moreover, the requirements to be met in order to enable it to claim the refunds and the monetary compensatory amounts were fulfilled by virtue of the fact that the goods were put into free circulation in the German Democratic Republic.

Once the goods were exported from the territory of the Community as part of a commercial operation having no connexion with German internal trade within the meaning of the Protocol, their subsequent delivery to the German Democratic Republic must be viewed in the light of the same criteria as those applied to a consignment to another country.

B — Observations submitted by the Government of the Federal Republic of Germany

As to the first question referred to the Court for a preliminary ruling, the Government of the Federal Republic of Germany considers that the concept of ‘export’ within the meaning of Article 9 of Regulation No 123/67, Articles 4 and 6 of Regulation No 176/67 and Article 3 (1), Article 4 (1) and Article 8 of Regulation No 1041/67 presupposes in principle that the goods have been put into free circulation in the country of destination. None of the Community law provisions in question describes or defines in detail the concept of ‘export’ or the requirement ‘that the products have been exported outside the Community’. Only the ideas and objectives of the legislature, expressed in the relevant legal provisions, can help to decide the answer to the question whether the term ‘export’ as used in Community legislation on export refunds presupposes that the goods have been put into free circulation. The Federal Government recalls the purpose of the Community legislation on refunds as embodied in Article 9 of Regulation No 123/67 and the relevant recital in the preamble, according to which the difference between prices within the Community and prices on the world market is covered by a refund for the products referred to in Article 1 of the regulation in order to enable the products to be exported. Article 3 (2) of Regulation No 176/67 shows that the amount of the export refunds is obviously determined by the actual conditions obtaining on the market of non-member countries. The objective which the export refunds are designed to achieve can only be accomplished when the Community products become involved in economic exchanges in non-member countries. Where the products are not put into free circulation, consequently, there can be no entitlement to an export refund.

The German Government considers that the observations made by the Court in Case 6/71 concerning Article 20 (2) of Regulation No 19 are also decisive for the interpretation of Article 9 of Regulation No 123/67 which has adopted the principal features of the former system of export refunds, in particular that in Article 8 of Regulation No 22 which resembles, in its turn, that in Article 20 (2) of Regulation No 19. Regulations Nos 176/67 and 1041/67 are based on Regulation No 123/67; in the implementing regulations the concept of export, as a condition for entitlement to a refund, must be understood in the light of the basic rules contained in the organizations of the market.

Although the judgment which the Court delivered in Case 125/75 is not directly relevant to the present case, the Court clearly intimated in that judgment that, having regard to the aim of the export refund, the deciding factor for entitlement to a refund is that the goods have been put into free circulation in a country in relation to which provision for such entitlement has been made. If the export refund were to be awarded in this case solely on the grounds that the goods have been transported from the Federal Republic of Germany to Austria, without having been cleared through customs there, the objective of the refund would not have been achieved, because the goods in question would not have been placed on the Austrian market. Only in exceptional circumstances, such as the disappearance of the goods in question whilst in transit under customs control or the delivery of the goods to a free zone for release for consumption or processing in accordance with their use, will putting them into free circulation cease to be an absolute requirement for giving rise to entitlement to a refund.

As to the second question referred to the Court for a preliminary ruling, the Government of the Federal Republic of Germany considers that the goods concerned in the present dispute cannot be held to have been exported from the Community and to be entitled to an export refund. Delivery such as that at issue must be considered as an integral part of German internal trade and is not affected by the EEC Treaty, as prescribed by paragraph 1 of the Protocol on German Internal Trade and connected problems of 25 March 1957. Consequently the substantive requirement of exportation has not been satisfied and the seller is therefore not entitled to an export refund.

If the Court replies in the negative to the first question in the form in which it has been asked, the Federal Government declares that the Court should draw the attention of the Bundesfinanzhof to the fact that the movement of goods from the Federal Republic of Germany to the German Democratic Republic is, from the economic point of view, a commercial operation between the German territories governed by the Basic Law of the Federal Republic of Germany and the German territories in which the Basic Law does not apply, even when the delivery is carried out via a third country, in which the goods have not been put into free circulation. To grant an export refund would be inconsistent with the current conditions governing German internal trade and in the circumstances no export refund is payable.

C — Observations submitted by the Commission of the European Communities

The Commission points out that bearing in mind the facts of the present case the plaintiff in the main action will be entitled to the refund which it claims only if the Community provisions concerning refunds are applicable and the plaintiff satisfies all the requirements laid down in those provisions for acquiring entitlement to a refund.

In this connexion the Commission notes that trade between the two parts of Germany is subject to special rules both by virtue of the law of the Federal Republic of Germany and by virtue of Community law. According to German law delivery of goods from one part of Germany to the other does not form part of external trade, but part of German internal trade between different zones, in relation to which special rules are to apply (Bundesverfassungsgericht [Federal Constitutional Court] 18, p. 353 at p. 354; 36, p. 1, at p. 17). From the point of view of Community law paragraph 1 of the Protocol on German Internal Trade and connected problems makes Community law inapplicable ab initio in this area which has been restricted to national law, whether Community law imposes charges or gives subsidies to international trade.

Delivery of goods within the area subject to the reservation regarding German internal trade does not amount to exportation giving rise to entitlement to a refund. In order to resolve the original dispute, it is therefore necessary to decide whether the transactions involved in the dispute form part of German internal trade or not. There is some doubt as to whether this question can form the subject of a preliminary ruling under Article 177 of the EEC Treaty. On the one hand the Protocol reserves for the Federal Republic of Germany the right to decide what must be considered as German internal trade, whilst on the other both the Protocol and the Treaty are subject to interpretation by the Court which is thus empowered to decide what limits are imposed by the Community on the exercise of this national power of decision.

However, a detailed examination of these questions is not necessary in the present case for Community law regarding refunds shows clearly that the plaintiff in the main action cannot have acquired the right to the refund claimed by it. As the Protocol precludes the granting of refunds for goods exported from one part of Germany to the other, the point of law to be considered, although this may not have been expressly mentioned in the various texts concerning refunds, is whether the refunds have been fixed for exports to non-member countries with the exception of the German Democratic Republic. This means that the situation is comparable to that which would arise if refunds for exports from the Federal Republic of Germany were varied according to the country of destination. Admittedly the provisions which have been adopted for granting non-uniform refunds (Article 8 of Regulation No 1041/67, now Article 11 of Regulation No 192/75) cannot be applied as they stand; however, the competent German authorities could refer to Article 4 of Regulation No 1041/67 (now Article 6 of Regulation No 192/75) in order to decide whether the rules in question have been observed.

The Commission claims that poultrymeat is also subject to the general rule that when refunds are varied according to the country of destination, the refund payable is that fixed for the country of destination which the goods in question have reached within the meaning of the Community legislation on refunds (Regulation No 176/67, Article 6 (2)), that is to say the non-member country into which the goods have been imported for marketing. Anyone who claims the refund applicable for any particular country of destination must, as the Court has confirmed on several occasions in Cases 6/71 and 125/75, prove that the goods in question have arrived in that country, have been imported into it and placed on the market. If the poultry-meat at issue in the main action was imported, marketed and taken for consumption exclusively in the German Democratic Republic, that country is objectively the only country of destination which the goods have reached as far as the Community provisions governing refunds are concerned. As no refunds are payable for that country of destination the plaintiff in the main action cannot claim any refund in the circumstances.

III — Oral procedure

At the hearing on 11 July 1979 oral observations were submitted by the plaintiff in the main action, represented by Mr Landry of the Hamburg Bar, the Government of the Federal Republic of Germany, represented by Dr Seidel, Ministerialrat in the Federal Ministry for Economic Affairs, and the Commission of the European Communities, represented by its Legal Adviser, Mr Gilsdorf.

The representative of the plaintiff in the main action dealt mainly in more detail with the arguments which he submitted in the course of the written proceedings, stressing the fact that in his opinion the first question relates solely to the concept of export without regard to any other conditions which might apply to a refund. In reply to a question asked by the Court he said that there was no systematic procedure for determining whether goods exported from the Federal Republic of Germany intended for a non-member country were in fact placed on the market in the German Democratic Republic.

The representative of the Government of the Federal Republic of Germany, on the other hand, claimed that there is a systematic procedure for determining the actual destination of exported goods, mainly as a result of the fact that only one body, the Hauptzollamt Hamburg-Jonas, is empowered to grant export refunds and the competent authorities may, on the basis of reports drawn up by that office, carry out checks on the undertakings concerned, mainly on the basis of their commercial records. He added that the main features of the German system were adopted, at Community level, by Directive No 77/435 /EEC on 27 June 1977 on scrutiny by Member States of transactions forming part of the system of financing by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (Official Journal L 172 of 12 July 1977, p. 17). As to the substance of the case, the German Government's main point was that all the provisions of Community law referred to in the first question referred to the Court for a preliminary ruling concern only methods of payment (‘Zahlungsmodalitäten’) of the refunds, without clearly defining the concept of export on which the entitlement to a refund (‘materieller Erstattungsanspruch’) rests. It is therefore necessary to refer to the objectives of the rules in question.

According to the Commission the Court need only reply to the second question referred to it for a preliminary ruling, for under the Protocol on German Internal Trade and connected problems the rules governing exports of agricultural products from the Federal Republic of Germany to the German Democratic Republic are to be considered as if refunds had been fixed only for non-member countries excepting the German Democratic Republic, so that the situation is the same as that where varying rates of refund are to be applied. In a subsidiary comment the Commission shares the view of the German Government that the provisions referred to in the first question concern only the detailed rules for paying refunds. In any event entitlement to a refund exists only if the goods in question have in fact reached the country of destination. If, where the rates are uniform, Community legal provisions are restricted in principle to requiring proof that the goods have left the geographical territory of the Community unaltered, this is dictated purely by practical considerations in order to facilitate trade; nevertheless, under Article 6 (3) of Regulation No 176/67 which was implemented mainly by Article 4 of Regulation No 1041/67, the exporter must always be prepared to have to prove more than the simple fact that the goods in question have left the geographical territory of the Community.

The Advocate General delivered his opinion at the sitting on 13 September 1979.

Decision

1. By an order of 9 January 1979 which was received at the Court on 5 February 1979, the Bundesfinanzhof referred two questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty on the interpretation of certain Community provisions governing export refunds for products subject to the common organization of the market in poultry-meat.

2. It appears from the order referring the matter to the Court that the questions arose in the course of proceedings between a German undertaking and the customs authorities of the Federal Republic of Germany regarding the latter's refusal to grant export refunds for a quantity of frozen chickens which, after having been sold to a buyer in a non-member country, left the geographical territory of the Community on 28 and 30 August 1973 and were delivered, without being transhipped and after travelling via the territory of a non-member country under customs control, to the German Democratic Republic where they were put into free circulation.

3. The first question raised by the Bundesfinanzhof concerns the concept of ‘export’ within the meaning of the provisions concerning the grant of export refunds. The question is whether, as the plaintiff in the main action claims, the goods can be considered as having been exported within the meaning of those provisions as soon as they have left the geographical territory of the Community, or whether, as the German authorities contend the goods must have been put into free circulation in the non-member country for which they were destined, and whether this is so even where the refund rates are not varied according to the destination of the goods.

4. From the wording of the second question raised by the Bundesfinanzhof, and the facts of the case, it appears that the wider problem raised by the first question concerns in fact the specific case of goods originating in the Federal Republic of Germany which have left the territory of the Community in order to be put into free circulation in the German Democratic Republic after having crossed the territory of non-member countries under customs control. Therefore the problem in this dispute does not concern trade with non-member countries in general, but trade between the Federal Republic of Germany and the German Democratic Republic. That is why the Bundesfinanzhof has referred to the Protocol on German Internal Trade and connected problems of 25 March 1957, which is annexed to the EEC Treaty, in order to interpret the provisions in question. In the circumstances it is appropriate to consider the questions as a whole.

5. Paragraph 1 of that Protocol provides that:

6. As the Court has already stated in its decision of 1 October 1974 in Case 14/74 (Norddeutsches Vieh- und Fleischkontor v Hauptzollamt Hamburg-Jonas [1974] 2 ECR 899) this provision is intended to relieve the Federal Republic of Germany of the obligation to apply the rules of Comunity law to German internal trade. It accords a special status to the German Democratic Republic as territory which does not form part of the Community but which is not a non-member country vis-à-vis the Federal Republic of Germany.

7. The result is that in every case where Community law regulates trade between the Community and non-member countries, the Federal Republic of Germany is authorized to consider that such rules are not applicable to German internal trade. The concept of ‘export’ used in the Community regulations concerning the common organization of the markets in agricultural products does not therefore apply to trade in goods between the Federal Republic of Germany and the German Democratic Republic.

8. The plaintiff in the main action, however, claims that the Protocol does not apply in this case. It points out that the goods were sold and delivered to a buyer in a non-member country and that two purchasing transactions were concluded: on the one hand between undertakings in the Federal Republic of Germany and in Austria, on the other between undertakings in Austria and the German Democratic Republic. That is not the decisive factor, however; for a transaction to form pan of German internal trade within the meaning of the Protocol, it is necessary, and at the same time sufficient, that the goods are put into free circulation in the German Democratic Republic without having been in free circulation in a third country after having left the territory of the Federal Republic of Germany. The sequence of commercial transactions and their forms do not need to be taken into account.

9. The answer to the questions which have been referred to the Court should therefore be that she concept of ‘export’ within the context of the Community provisions concerning export refunds for agricultural products subject to the common organization of the markets must be interpreted as meaning that it does not refer to trade forming pan of German internal trade within the meaning of the Protocol of 25 March 1975.

Costs

10. The costs incurred by the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable; as the 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, THE COURT, in answer to the questions referred to it by the Bundesfinanzhof, by order of 9 January 1979, hereby rules: