Report for the Hearing in Joined Cases C-5/90 and C-206/90

I — Facts and procedure

A — Legal framework

1. General provisions governing export refunds applicable in the cereals sector

a) Article 16 of Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (Official Journal 1975 L 281, p. 1) provides, in the case of trade with third countries, the possibility of granting export refunds covering the difference between the quotations or prices for the products covered by that regulation on the world market and the prices within the Community. Those provisions are applicable in particular to the products covered by Article 1(c) of that regulation, which include wheat flour.

b) Article 2 of Regulation (EEC) No 2746/75 of the Council of 29 October 1975 laying down general rules for granting export refunds on cereals and criteria for fixing the amount of such refunds (Official Journal 1975 L 281, p. 78) provides as follows : So far as products covered by Article 1 (c) of Regulation No 2727/75 are concerned, Article 4 of Regulation No 2746/75 provides that refunds are to be fixed in accordance with the following specific criteria :

‘The following shall be taken into account when refunds are being fixed:

a) the existing situation and the future trend with regard to:

prices and availabilities of cereals on the Community market,

prices for cereals and cereal products on the world market;

b) the aims of the common organization of the market in cereals, which are to ensure equilibrium and the natural development of prices and trade on this market;

c) the need to avoid disturbances on the Community market; and

d) the economic aspect of the proposed exports.’

‘(a) cereal prices ruling on the various Community markets;

b) the quantities of cereals required for the manufacture of the products in question and the value of byproducts;

c) possibilities and conditions for the sale of those products on the world market.’

c) The provisions of Commission Regulation (EEC) No 2730/79 of 29 November 1979 laying down common detailed rules for the application of the system of export refunds on agricultural products (Official Journal 1979 L 317, p. 1) also apply to the cereals sector. Article 3 of that regulation provides that:

‘1. The date of export shall determine: (a) the rate of the refund where the refund is not fixed in advance; (b) any adjustments to be made to the rate of the refund where it is so fixed.

2. The date of export shall be the day of acceptance by the customs authority of the declaration by which the exporter sutes his intention to export the products in question and qualify for a refund, or the day on which occurs any other act having the same effect in law as such acceptance.

3. At the time of such acceptance, or of such act, the products shall be placed under customs control and shall so remain until they leave the Community ...’.

d) Finally, the annex to Commission Regulation (EEC) No 1633/80 of 26 June 1980 fixing the export refunds on cereals and on wheat or rye flour, groats and meal (Official Journal 1980 L 162, p. 45) provided that the amounts of refund applicable to wheat flour were inter alia as follows : CCT Heading No Description Refund (ECU/tonne) ... ex 11.01 A Wheat flour: — of an ash content of 0 to 520: — for exports to the USSR 0 — for exports to other third countries 75.00 — of an ash content of 521 to 600: — for exports to the USSR 0 — for exports to other third countries 71.00 ...

2. Specific provisions governing the advance payment of refunds

a) For the purpose of ensuring a balance between the use of Community basic products with a view to exporting processed products or goods to third countries and the use of basic products from such countries admitted under inward processing arrangements, Council Regulation (EEC) No 565/80 of 4 March 1980 (Official Journal 1980 L 62, p. 5) provided that the exporters concerned could qualify for advance payment of refunds in respect of agricultural products. Under Article 4(1) of that regulation: Article 4(5) and (6) provides as follows:

‘An amount equal to the export refund shall, at the request of the party concerned, be paid as soon as the basic products are placed under customs control ensuring that the processed products or the goods will be exported within a set time-limit.’

‘5. The rate of the export refund shall, unless it is fixed in advance, be that in force on the day on which the basic products are brought under customs control.

6. Where the export refund is fixed in advance, the day on which the basic products are brought under customs control shall be the operative date for determining any adjustment to be made to the rate of refund applicable.’

b) Article 2 of Commission Regulation (EEC) No 798/80 of 31 March 1980 laying down general rules on the advance payment of export refunds and positive monetary compensatory amounts in respect of agricultural products (Official Journal 1980 L 87, p. 42) makes it clear that admission under the arrangements set out in Regulation No 565/80 are to be subject to the lodging with the customs authorities of a declaration referred to as the ‘payment declaration’. That declaration is required to include all such particulars as are necessary for determining the refund, and especially (Article 2(2)): Article 2(3) of that regulation provides that the payment declaration may, on request from the exporter and where circumstances so warrant, include provisional particulars of the goods to be obtained from basic products.

‘(a) a description of the products or goods in accordance with the nomenclatures used for refunds and monetary compensatory amounts;

b) the net weight of the products or goods, or, where applicable, the unit of measurement to be taken into account in calculating the refund or the monetary compensatory amount;

c) in so far as it is necessary for determining the refund or the monetary compensatory amount, particulars of the composition of the products or goods or the relevant reference.’

c) Article 7(1) of Regulation No 798/80 provides that:

‘A security equal to the amount calculated in accordance with Article 6(3) plus any positive monetary compensatory amount, and increased by 20% of these amounts, shall be furnished prior to the acceptance of the payment declaration.

The increase shall not be less than 3 ECU per 100 kilograms net.’

d) The periods during which the basic products may remain under customs control and the periods within which the processed products must be exported are laid down in Article 11 of Regulation No 798/80.

e) Article 10(1) of Regulation No 798/80 provides as follows:

‘The release in full of the security shall be subject to the production of proof that:

a) the time-limits laid down in Article 11 have been respected;

b) the products concerned have an entitlement to a refund equal to or higher than the amount determined in accordance with Article 6(3).’

f) Article 10(4) of Regulation No 798/80, as amended by Commission Regulation (EEC) No 3445/85 of 6 December 1985 (Official Journal 1985 L 328, p. 13) which, on request of the parties involved, is applicable to the present cases, provides that:

‘Except in cases of force majeure, reimbursement of the following amounts shall be required:

a) where the time-limits laid down in Article 11 have not been complied with :

an amount equal to the security;

b) where the time-limits laid down in Article 11 have been complied with but the entitlement to refund covers a smaller amount than that referred to in paragraph 1(b) and the minimum increase provided for in Article 7(1), second sentence, has not been applied:

where Article 7(3) applies, an amount equal to the security, less the amount of the actual refund reduced by any negative monetary compensatory amount due, increased by 20%,

in other cases, an amount equal to the security, less the amount of the actual refund and any positive monetary compensatory amount due, increased by 20%,

c) where the time-limits laid down in Article 11 have been complied with but the entitlement to refund covers a smaller amount than that referred to in paragraph 1(b) and where the minimum increase provided for in Article 7(1), second sentence, has been applied:

an amount equal to the difference between the amount advanced and the amount due, this difference being increased by the percentage which expresses the relationship between the minimum increase and the amount advanced.’

B — Background to the proceedings

The facts of the disputes in the main proceedings, as set out in the orders making the references, are as follows:

1. In Case C-5190

a) On 27 November 1980 the undertakings Bremer Rolandmühle Erling & Co. (‘Bremer Rolandmiihle’) and Kurt A. Becher GmbH & Co. KG (‘Becher’), which had formed an ad hoc association, placed 10533837 kg of wheat under customs control pursuant to Article 4 of Regulation No 565/80. The payment declaration referred to the export, following processing of the wheat placed under customs control, of flour with an ash content of 0 to 520 mg/100 g. The Hauptzollamt (Principal Customs Office) Hamburg-Jonas (‘the Hauptzollamt’) granted those undertakings DM 1949864.84 in respect of the advance payment of refunds and monetary compensatory amounts. The flour was exported to Poland, the USSR and North and South Yemen.

b) Basing itself on the ground that the flour actually exported had had an ash content greater than 520 mg/100 g, the Hauptzollamt, by a notice dated 2 April 1982, as amended by a revised notice of 15 October 1982, requested reimbursement from the two undertakings of DM 616507.19 in respect of refunds wrongfully paid and DM 571543.97 in respect of the minimum increase provided for under the second sentence of Article 7(1) of Regulation No 798/80. According to the Hauptzollamt, only export refunds corresponding to the flour actually exported were entitled to be granted and set off against amounts owed by the exporter. Those refunds had to be calculated under the conditions set out in Articles 3 and 4 of Regulation No 2730/79, that was to say, not later than the last day of validity of the export certificates (30 November 1980), on the basis of the prefixed rate in force on 3 July 1980 and, later than 30 November 1980, on the basis of the daily rates applicable at the date of export. By an amending notice of 14 October 1988, the Hauptzollamt decided not to seek payment of the minimum increase.

c) The case was brought before the Finanzgericht (Finance Court) Hamburg, which decided that: It followed, in the opinion of the Finanzgericht, that the undertakings were entitled to an export refund corresponding to flour with an ash content of 600 mg/100 g and calculated on the basis of the rate of refund fixed in advance.

i) it had not been established that the undertakings in question had exported flour with an ash content of 0 to 520 mg/100 g, in accordance with the information given in their payment declaration;

ii) the provisions of Article 10(4)(c) of Regulation No 798/80, as amended by Regulation No 3445/85, were applicable.

d) The parties to the proceedings appealed to the Bundesfinanzhof (Federal Finance Court) on a point of law. In its order of 21 November 1989, the Bundesfinanzhof takes the view that the case in which the product actually exported does not correspond to the information given on the payment declaration is not expressly covered by Regulation No 798/80 and that it is not certain that the provisions of Article 10(4)(b) and (c) of that regulation are applicable in such a case. The order also points out that the judgment of the Court of Justice in Case 288/85 Hauptzollamt Hamburg-Jonas v PUnge Kraft-Jutterwerke GmbH & Co. [1987] ECR 611 did not resolve this question inasmuch as the only matter at issue in that case related to the 20% supplement provided for under the Community rules. By reason of the suspension of refunds for exports to the USSR, the present case, in the view of the Bundesfinanzhof, highlights the considerable economic consequences which would flow from a fresh calculation of the amounts of refunds pursuant to the general provisions of Regulation No 2730/79 rather than pursuant to Article 4(5) of Regulation No 565/80. However, the Bundesfinanzhof points out that in the event of an increase in the refund rates such a method of calculation would not be to the exporter's detriment. The Bundesfinanzhof also asks whether, in the case that this solution should be applicable, Regulation No 1633/80 is valid in so far as it fixed at 0 the rate of refund for exports to the USSR. As this measure was dictated by general political reasons connected with USSR intervention in Afghanistan, it was not certain whether the Commission had the power, in the absence of authority conferred on it by the Council, to adopt a decision which was tantamount to a boycott of grain deliveries. It was in those circumstances that the Bundesfinanzhof, by an order of 21 November 1989 which was lodged at the Court Registry on 8 January 1990, stayed the proceedings and referred the following questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty:

‘1) Is Community law, in particular Article 10(4) of Commission Regulation (EEC) No 798/80, as amended by Commission Regulation (EEC) No 3445/85, to be interpreted as meaning that a recipient of export refunds who, in claiming advance payment of the export refunds under Article 4 of Regulation (EEC) No 565/80, had undertaken pursuant to Article 2 of Regulation No 798/80 to export flour with an ash content of 0 to 520 mg/100 g but in fact exported flour with an ash content of more than 520 mg/100 g must repay the entire amount of the advance payment and only claim instead an export refund for the goods actually exported, in accordance with the rules in Commission Regulation (EEC) No 2730/79 of 29 November 1979?

2) If Question 1 is answered in the affirmative, is Regulation (EEC) No 1633/80 valid inasmuch as it fixes the rate of export refunds for exports to the USSR at 0 ECU? If not, in certain circumstances is an exporter to be put in a position as if the refund for exports to the USSR had not been suspended?’

2. In Case C-206/90

a) On 28 November 1980 the two undertakings Bremer Rolandmühle and Getreide-Import GmbH (‘Getreide- Import’), who had formed an ad hoc association, placed 7682779 kg of wheat under customs control in accordance with the conditions set out in Article 4 of Regulation No 565/80. The payment declaration referred to the export, following the processing of the wheat placed under customs control, of flour with an ash content of 0 to 520 mg/100 g. The Hauptzollamt granted the two undertakings DM 1588041.69 in respect of advance payment of refunds and monetary compensatory amounts. The flour was exported to North Yemen.

b) Basing itself on the fact that the flour actually exported had had an ash content greater than 520 mg/100g, the Hauptzollamt, by a notice of 19 March 1982, demanded reimbursement by the two undertakings of DM 830412.35 in respect of refunds incorrectly paid and DM 419862.35 in respect of the minimum increase. By a revised notice of 12 October 1988, the Hauptzollamt decided not to seek payment of the minimum increase.

c) The case was brought before the Finanzgericht Hamburg, which followed the same line of reasoning as it had taken in the main proceedings in Case C-5/90. That court held that the undertakings were entitled to an export refund in respect of flour with an ash content of 600 mg/100 g, calculated on the basis of the rate of refund fixed in advance.

d) The parties to the proceedings appealed on a point of law to the Bundesfinanzhof against the decision of the Finanzgericht.

It was in those circumstances that the Bundesfinanzhof, by order of 8 May 1990, which was received at the Court Registry on 6 July 1990, stayed the proceedings and referred to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty a question identical to the first question referred in Case C-5/90.

C — Procedure before the Court

1. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the Commission of the European Communities, represented by Dierk Booss, Legal Adviser to the Commission, acting as Agent, by the Hauptzollamt, represented by its Director, Herr Bollmann, by Bremer Rolandmühle, represented by H. Bohnen, Rechtsanwalt, of Schackow & Partner, by Becher, represented by P. Streck, Rechtsanwalt, of Mielke & Streck, and by Getreide-Import, represented by J. Gündisch, Rechtsanwalt, of Modest, Gündisch, Landry.

2. By an order of 24 April 1991, the Court joined the two cases for the purposes of the oral procedure and judgment.

3. By a decision of 24 April 1991, the Court assigned the two cases to the Fifth Chamber. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court also decided to open the oral procedure without any preparatory inquiry. However, it requested the Commission, Bremer Rolandmühle, Becher, Getreide-Import and the Hauptzollamt to reply to a number of questions.

II — Written observations submitted to the Court

The first question referred in Case C-5/90 and the single question referred in Case C-206/90

A —. The Commission and the Hauptzollamt argue that this question should be answered in the affirmative. In their view, a trader is under an obligation to export a product the characteristics of which correspond to the information set out in the payment declaration. If that obligation is not complied with, the system of advance payment of export refunds must be treated as having failed and the trader consequently cannot be entitled to benefit under the provisions governing that system.

1. The correspondence between the product actually exported and the information set out in the payment declaration

The Commission argues that it is essential for the proper functioning of the refund system that the product exported should correspond to the information set out in the payment declaration.

a) In support of this contention, it puts forward the following arguments:

1) The above judgment of the Court in Plange Kraftfutterwerke expressly pointed out at paragraph 11 that the advantage of advance payment of the refund is subject to compliance by the trader with certain conditions concerning the characteristics of the product exported and the method of exportation.

2) Article 2(3) of Regulation No 798/80 makes it possible for the trader, in certain circumstances, to include only provisional particulars of the goods to be exported, if he does not avail of this facility, the trader is bound by the details given in the payment declaration, which must be regarded as exact and definitive.

3) The submission and date of the payment declaration have legal effects since, under Article 4(5) and (6) of Regulation No 565/80 and Article 3 of Regulation No 798/80 they determine the rate of refund and the monetary compensatory amounts or, in the case of advance fixing, the corrections to be made pursuant to Article 16(4) of Regulation No 2727/75. To accept that a trader, while benefiting from the refund rates applicable under the advance fixing procedure, might manufacture and export a product different from that referred to in the payment declaration would be tantamount to opening the door to speculation.

4) The interpretation suggested is also consistent with Article 42(1) of Commission Regulation (EEC) No 3183/80 of 3 December 1980 laying down common detailed rules for the application of the system of import and export licences and advance fixing certificates for agricultural products (Official Journal 1980 L 338, p. 1), which provides that compliance with the obligation to export resulting from an export licence or advance fixing certificate is made subject to compliance with the time-limit laid down in Article 11 of Regulation No 798/80 ‘for the quantity concerned’. A quantity can be defined only in relation to a specific product.

5) The accurate submission of the payment declaration is considered by the Court to be a fundamental obligation, failure to comply with which will entail forfeiture of the benefit of the transaction (judgments in Case 66/82 Fromançais SA v FORMA [1983] ECR 395, at paragraphs 8 and 13, and in Case 15/83 Denkavit Nederland BV v Hoofdproduktschap voor Akkerbouwprodukten [1984] ECR 2171, at paragraphs 29 and 31).

b) In order to determine whether the product corresponds to the information set out in the payment declaration, it is necessary, in the Commission's opinion, to base oneself on the ‘nomenclatures used for refunds and monetary compensatory amounts’ (Article 2(2) of Regulation No 798/80). In the case referred by the national court, both Regulation (EEC) No 162/67 of the Commission of 23 June 1967 on the method of fixing the export refund on flour, groats and meal of wheat and of rye (Official Journal, English Special Edition 1967, p. 122) and Regulation No 1633/80 draw a distinction between flour with an ash content of 0 to 520mg/100g and flour with an ash content of 521 to 600 mg/100 g. It is also necessary to point out that the amount of the refund depended on the flour's ash content and that it was for that reason necessary, in accordance with Article 2(2)(c) of Regulation No 798/80, to refer to that content in the payment declaration. The fact that the various types of wheat flour come under the same tariff heading (ex 11.01 A) cannot therefore be taken into consideration for the application of the provisions requiring interpretation.

The Hauptzollamt argues that the payment declaration addressed to the customs authorities determines the subject-matter and purpose of the procedure governing the request for advance payment of the export refund. It follows that the characteristics of the product actually exported must correspond to those of the product which the trader has undertaken to export in that declaration.

a) More specifically, the Hauptzollamt argues that the purpose of the procedure introduced by Regulation No 798/80 is to enable customs authorities to exercise reasonable and effective control. In order for it to be possible to exercise that control over operations in which the basic product is processed, the propriety of the procedure followed, and compliance with the obligations relating to export licences and processing periods laid down in Article 11(1) of Regulation No 798/80, it is vital that customs authorities should have at their disposal all the information relating to the export transaction from the outset of the procedure. As the Bundesfinanzhof pointed out in a decision delivered on 7 March 1989, the admission that an exporter is not bound by the information regarding the characteristics of the product contained in the payment declaration would make it more difficult for customs authorities to carry out checks or would render more thorough checks necessary. It is solely within the context of the specific provisions of Article 2(3) of Regulation No 798/80 that it is possible to accept that the payment declaration may. contain a provisional description of the product intended for export. These latter provisions apply to the goods covered by Article 2(c) of Regulation No 565/80. In the case of other products, including wheat flour, the product exported must correspond exactly to the information set out in the payment declaration. The opposite interpretation accepted by the Finanzgericht would, in the view of the Hauptzollamt, allow a trader to benefit from the derogating provisions relating to advance payment of refunds, even where the product actually exported is, contrary to the undertaking given in the payment declaration, excluded from the scope of those provisions.

b) The Hauptzollamt, like the Commission, argues that in order to determine whether that obligation of correspondence has been complied with, it is necessary to base oneself on the nomenclature applicable in respect of refunds and not on the customs nomenclature. If there is a difference between the product exported and the product referred to in the payment declaration, the fact that that difference is minimal cannot be taken into account for the application of the Community provisions in question. Any criterion other than that based on the nomenclature would be subjective and arbitrary and would introduce a significant element of uncertainty into the supervisory activities of the customs authorities.

2. The consequences which follow if the product actually exported does not correspond to the information set out in the payment declaration

The Commission relies on the following arguments :

a) It follows from Article 10(4)(a) of Regulation No 798/80 that if the time-limits laid down in Article 11 of that regulation have not been complied with, the procedure of advance payment of export refunds must be regarded as having failed. Article 11 of the regulation will not have been complied with in the case where the products whose characteristics are accurately mentioned in the payment declaration are not exported outside the geographical territory of the Community within a period of 60 days which starts to run from the day on which they cease to be placed under the customs control provided for by Article 4 of Regulation No 565/80. In that case, the trader will be required to repay the amount of the refund payed in advance, plus an additional amount. The Hauptzollamt was for that reason wrong, in the cases referred, in deciding not to recover the minimum increase and apparently taking the view, on the basis of the principle of unjust enrichment, that the undertakings concerned had to repay only the refunds which they had improperly received. The express provisions of Article 10(4)(a) must take precedence over the general principle of unjust enrichment.

b) The provisions of Article 10(4)(b) and (c) of Regulation No 798/80, on the other hand, are inapplicable in the case of failure of advance payment. Those provisions cover cases where the difference between the amount of the refund due to the trader and the prepaid amount is attributable to changes in certain factors during the procedure, such as the use or destination of the products, provided for under Article 2(4) of Regulation No 798/80. Those factors do not concern the definition of the product and have therefore no bearing on the submission and date of the payment declaration. In such cases, if there is no possibility of fraud, it is sufficient, in the interests of proper administration, that the exporter be required to pay only the amounts provided for under Article 10(4)(b) or (c) of Regulation No 798/80. The Commission points out in this regard that Article 8(2) of Regulation No 3183/80 also draws a distinction, for the purpose of defining the obligations arising from the advance fixing certificate, between the definition of the product and its use and destination.

c) It follows that in the cases referred the difference between the amount requested from the trader, by reason of the failure of the advance fixing procedure, and the refund due to that trader must be determined on the basis of Article 9 of Regulation No 798/80. Unlike Article 10(4)(b) and (c) of that regulation, Article 9 allows the payment of compensation in respect of amounts due by reason of two separate refund procedures. In the context of Article 9, the amount of the refund due to the trader must be calculated in accordance with the general rules on export refunds contained in Articles 3 and 4 of Regulation No 2730/79. The Hauptzollamt argues that if the advance fixing procedure fails because the product exported did not correspond to the information set out in the payment declaration, the trader must repay the amount of advance refund which he has received. That, it argues, is the sense of the Court's judgment in Plange Kraftfutterwerke, cited above. In the same way as the Commission, the Hauptzollamt takes the view that in such a case the time-limit laid down by Article 11 of Regulation No 798/80 will not have been complied with. The provisions of Article 10(4)(b) and (c) of that regulation are for that reason inapplicable. The latter provisions cover cases in which entitlement to the refund relates only to a very small amount and it can be accepted that the time-limit for processing has been complied with, as in the case where the exporter reduces the quantities or alters the destination of the exported goods. That was the tenor of the Commission's observations in the Plange Kraft-futterwerke case. The point, however, was not addressed in the judgment, as the Court ruled solely on the expediency and the calculation of the supplement due from the exporter. It follows that the amount of the refunds due to the exporter, to be set off against the amount of refunds requiring to be repaid, must be calculated on the basis of Regulation No 2730/79 rather than on the basis of Article 4(5) of Regulation No 565/80. The resultant charge on the exporter is not disproportionate in view of the fact that he was under an obligation to ensure compliance with the undertaking given in the payment declaration. The exporter is simply treated as a trader operating outside the advance payment system, something which does not necessarily work against his interest in the possible case of increases in refund rates.

B —. Bremer Rolandmühle, Becher and Getreide-Import, on the other hand, argue that in the cases referred the advance payment operation cannot be regarded as having failed. It is simply necessary to amend the amount of the refund paid in advance by applying the applicable rate to the product actually exported on the date referred to in Article 4(5) and (6) of Regulation No 565/80. Those undertakings contest in particular the argument that the export of flour of a quality slightly different from that mentioned in the payment declaration must be treated as tantamount to a failure by the exporter to comply with the time-limits laid down in Article 11 of Regulation No 798/80. They put forward the following arguments:

1. Types of flour having different ash contents cannot he regarded as different products

On this point, Bremer Rohndmühle submits that:

a) the base product, wheat, can be processed only into wheat flour. Article 1 of Regulation No 2727/75, which refers to the product wheat or mesiin flour (Heading No 11.01 A of the Common Customs Tariff), makes it clear that wheat flour is a single product, the quality of which varies according to the ash content;

b) this is the opinion of the professional traders concerned. In Germany, 550 flour is constituted by products with an ash content between 490 mg/100 g and 580 mg/100 g. According to the general rules on the trade in goods, with which regulations dealing with refunds must comply, an ash content in excess of that originally provided for justifies only an action on the guarantee that the goods would be free from any defect. It cannot be treated as tantamount to a failure to deliver or a failure to comply with delivery periods;

c) it was only during the period between 12 June 1980 and 5 May 1983 that the Community rules applicable to refunds introduced different rates for flour with an ash content of 0 to 520 mg/100 g and flour with an ash content of 520 to 600 mg/100 g;

d) in the observations which it submitted in Case C-5/90 (p. 9 of its written observations), the Commission itself appears to have doubts as to the existence of two separate products;

e) the competent Management Committee proposed on 27 September 1990 that the two groups of flour of 0 to 520 mg/100 g and 520 to 600 mg/100 g should be joined together in a single group.

With more particular reference to Case C-206/90, Bremer Rolandmühle points out that proof that the ash content specified in the payment declaration was exceeded was not adduced in the main proceedings and that, in any event, it also had an export certificate permitting it to export flour with an ash content greater than 520 mg/100 g.

Getreide-Import takes the view, on grounds similar to those outlined by Bremer Rolandmühle, that the fact that the ash content was slightly exceeded cannot justify a finding that the product actually exported differed from that referred to in the payment declaration.

2. In the cases referred by the national court, Community law does not penalize, by loss of the benefit of the provisions relating to the advance payment of export refunds, failure on the part of the product actually exported to correspond to the information contained in the payment declaration

Bremer Rolandmühle puts forward the following textual arguments:

a) Regulation No 565/80

Concerning the purpose of the regulation, as set out in the third and fourth recitals in its preamble: that purpose, which is to ensure a balance between the use of Community basic products with a view to exporting processed products to third countries and the use of basic products from such countries admitted under inward processing arrangements, does not justify the interpretation that the very existence of the export transaction should not be recognized in the cases referred;

Article 4(1) of the regulation: it follows from that provision that the relevant time for calculating the refund is that at which the basic product is placed under customs control. The determinant nature of that time was confirmed by Advocate General Sir Gordon Slynn in his opinion in the PUnge Krafifutterwerke case, cited above. In the present case, the basic product was placed under customs control and subsequently exported, following processing, within the periods stipulated. It is for that reason not possible to accept that the flour was once again exported after the expiry of the periods under the circumstances set out in Article 11 of Regulation No 798/80;

Article 4(6) of the regulation: this provision dealing with ‘adjustment’ applies in the cases referred by the national court. The adjustment consists in applying to the product actually exported the lower rate of refund applicable to that product at the date on which the basic product was placed under customs control;

Article 6 of the regulation: this article provides for a partial release of the security, rather than its total forfeiture by the trader, in the case where the amount of the refund proves to be smaller than the amount paid in advance.

b) Regulation No 798/80

Article 2(1) of the regulation: it follows from this provision that the principal obligation imposed on the trader is to process and export the basic product placed under customs control. In the case referred by the national court, those two conditions are satisfied;

Article 2(2) of the regulation: it follows from this provision that the information provided in the payment declaration is necessary for the calculation of the refunds. It does not imply that the trader is under an obligation to export products which are exactly of the quality indicated;

Article 2(3) of the regulation: this provision, which allows provisional particulars of the product exported to be included in the payment declaration, applies where the characteristics of the product in question cannot or need not yet be fixed. In the absence of an express provision to that end, it cannot be interpreted as conferring, in cases other than those specified, an immutable character on the indication of the quality of the product, failure to comply with which will be severely penalized;

Article 3 of the regulation: this article specifies the conditions for the application of Article 4(6) of Regulation No 565/80 and must be interpreted as allowing, in the case referred by the national court, the operation of an adjustment on the basis of the rate of refund applicable at the date on which the basic product was placed under customs control (see also, in this connection, the final sentence of Article 6(4) of Regulation No 565/80);

Article 10(4)(b) of the regulation: this provides for a partial reimbursement of the refund where this proves to be smaller than the refund paid in advance.

c) Regulations No 2730/79 and No 3183/80

Article 4(2) and (3) of Regulation No 2730/79: these provisions state that the characteristics of the product are to be determined on the day on which customs export formalities are completed. Article 4(4) does not provide any sanction for the case where the product actually exported has characteristics different from those which it had at the date on which the customs formalities were completed;

Article 42 of Regulation No 3183/80: this provision, which was cited by the Commission in its written observations, relates exclusively to the quantity of the product exported, and not to its quality. On an a contrario reading, and in the absence of express provisions to the contrary, it means that a discrepancy with regard to the quality provided for cannot be treated as tantamount to a failure to export (see also, in this regard, Article 9 of Regulation No 2730/79).

Becher relies on the following arguments:

a) It follows from the third and fourth (second phrase) recitals in the preamble to Regulation No 565/80 and from Article 4 thereof that, for the application of the Community provisions relating to the advance payment of refunds, the determinant moment is that in which the basic product is placed under customs control which guarantees that it will, following processing, be exported within a specified period. The second paragraph of Article 6 of Regulation No 565/80 provides for the case in which the amount of the refund due is lower than the amount of the refund paid in advance. There is nothing in the Community rules to suggest that in such a case customs control has not taken place or that the processing of the basic product took place Outside the customs control procedure'. This was the sense of the Advocate General's Opinion in the PLnge Krafifutterwerke case. The Advocate General had there pointed out that the customs control was not affected by the manufacture of a product with characteristics appreciably different from those mentioned in the declaration of payment. What was at issue there was only ‘the same transaction under a different qualitative heading’.

b) It follows that, in the cases referred, the amount of the refund must be rectified in accordance with the rate applicable to the product actually exported. On the other hand, it is not appropriate to alter the date on which the refund was to be calculated in the context of the advance payment procedure. The amount of the refund due to the exporter on the basis of this calculation must be set off against the amount of the refund paid in advance; this is also the case if the exporter has complied with the information contained in the payment declaration.

c) An interpretation contrary to that proposed could not rely on the provisions of Article 2(2) of Regulation No 798/80 relating to the particulars which must be mentioned in the payment declaration concerning the characteristics of the product intended for export. Those particulars are intended solely to enable a calculation to be made of the refund which is the subject of the advance payment. Failure to comply with the information, which must also be provided in the case of export without a request for advance payment, does not involve any correction other than that relating to the rate of refund applicable to the product actually exported. An interpretation to the contrary would, moreover, fail to take account of the meaning and purpose of the system of advance payment and of the analogy between that system and the system of inward processing.

d) In the case referred, the period for processing of the basic products laid down in Article 11(1) of Regulation No 798/80 was complied with by reason of the processing of the wheat into flour. That flour was also exported within the prescribed periods.

The provisions of Article 10(4)(b) and (c) of that regulation are for that reason applicable and the information to be taken into consideration is the difference between the amount of the refund paid in advance and the amount of the refund due in respect of the product actually exported, as calculated on the date of the advance fixing.

Getreide-Import relies on the following arguments :

a) According to the provisions of Article 2 of Regulation No 565/80 and Article 2 of Regulation No 798/80, the exporter's obligations relate to the processing and export of the basic product placed under customs control and not to the characteristics of the processed product. Such an interpretation is in accordance with the meaning and purpose of the advance payment procedure, as referred to in the third recital in the preamble to Regulation No 565/80. Those obligations were complied with in the cases referred by the national court.

b) Reference in the payment declaration of payment to the characteristics and quality of the processed product is of importance only for the calculation of the amount of the refund to be paid in advance.

In the case where the amount of the refund proves to be smaller than the amount paid in advance, the provisions of Article 10(4)(b) and (c) of Regulation No 798/80, to which the preliminary reference relates, along with the provisions of the second paragraph of Article 6 of Regulation No 565/80 relating to the security, are applicable without its being necessary to distinguish the causes of that discrepancy.

In cases where the amount of the refund proves to be greater than the amount paid in advance, the second sentence of Article 9 of Regulation No 798/80, which provides for the payment of the difference to the exporter, becomes applicable. The interpretation to the effect that any discrepancy between the characteristics of the product actually exported and those set out in the payment declaration will justify recovery of the refund runs contrary to this latter provision.

3. The interpretation proposed by the Commission and the Hauptzollamt is neither logical nor justified

The three undertakings stress that, if the rates of refund were to be increased, the interpretation suggested by the Commission and the Hauptzollamt would allow the exporter, as the Bundesfinanzhof pointed out in the order making the reference in Case C-5/90, to obtain a higher refund than that which he would have received if he had complied with the information contained in the payment declaration. Such an interpretation would for that reason allow speculation on the part of traders.

In addition, Bremer Rohndmiihle argues that if one takes the view that exportation did not take place within the framework of an advance payment transaction, the export licence would have expired on the day of actual exportation. It must for that reason be accepted that exportation was made without being covered by an export licence, contrary to Article 12 of Regulation No 2727/75. In the logic of the argument put forward by the Hauptzollamt, no refund ought for that reason to be due to the exporter, even though the Hauptzollamt accepts that the undertakings in question are entitled to receive a refund calculated on the basis of the rate in force at the date of export.

According to Getreide-Import, the interpretation proposed by the Commission and the Hauptzollamt also cannot rely on the requirements of effective control by the customs authorities since, in the cases referred by the national court, the product actually exported is identical to that mentioned in the payment declaration both with regard to the nomenclature in the Common Customs Tariff and from the point of view of the traders and undertakings concerned.

4. The case-law of the Court of Justice does not provide justification for the interpretation proposed by the Commission and the Hauptzollamt

a) The judgment in PUnge Kraftfutterwerke Bremer Rolandmühle argues that the judgment did not resolve the question of law posed in the present cases as it dealt with the supplement owed by the exporter rather than with the calculation of the amount of refund requiring to be repaid by the latter. Paragraph 17 of the judgment merely suggests that the exporter is entitled to a ‘refund’, while paragraph 19 refers to the refund which the exporter ‘should have obtained’. This latter expression, however, appears to suggest that a notional calculation must be made by taking into account the date on which the rate of refund was fixed in advance or the date of the payment declaration. Similarly, even though the Advocate General did not expressly examine this question, he does on several occasions use the phrase ‘same transaction’, which would appear to invalidate the argument that the setoff between the amounts owed by the trader and those owed to him occurs outside the operation of advance payment of the refunds. Getreide-Import takes the view that that judgment rules exclusively on the question of the minimum increase and that it nowhere refers, even indirectly, to the appropriate date on which to calculate the amount of the ‘refund to which the exporter was entitled’, referred to in paragraphs 16, 18 and 19 of the judgment. The same applies with regard to the opinion of the Advocate General. Becher takes the view that this judgment supports the interpretation advocated by the exporting undertakings. It is in fact clearly indicated, both in the grounds and in the operative part of the judgment, that the amount of the refund due to the exporter is that which he ‘should have obtained for the products actually exported’.

b) The judgment in Fromançais Bremer Rolandmühle argues that this judgment, which was cited by the Commission, is not relevant as it involved a case in which periods for the processing of the product in question had not been complied with.

The second question referred in Case C-5/90

Bremer RoLndmühle and Becher argue that Regulation No 1633/80 is illegal on the ground that it fixes the rate of refund for exports to the Soviet Union at ECU 0.

That regulation, they claim, resulted exclusively from a political decision to discontinue grain deliveries to the Soviet Union by reason of that State's intervention in Afghanistan.

Neither Article 16 of Regulation No 2727/75 nor Articles 2 and 4 of Regulation No 2746/75 empower the Commission to adopt a regulation imposing a rate of refund of ECU 0 for reasons having no connection whatsoever with the law on the common organization of the markets.

Furthermore, Regulation No 1633/80, which introduced for the first time a rate of refund of ECU 0 in respect of exports to the Soviet Union, does not set out in its grounds the reasons for this substantive amendment and thereby fails to comply with the provisions of Article 190 of the EEC Treaty requiring Community measures to state the reasons on which they are based.

A decision of the Verwaltungsgericht (Administrative Court) Frankfurt, which has since become binding, had in fact already expressed doubts as to the validity of the regulation in question by reason of the absence of a statement of reasons.

The Commission, on the other hand, argues that Regulation No 1633/80 is valid.

1) It follows from Article 16 of Regulation No 2727/75 and Articles 2 to 4 of Regulation No 2746/75 that the Commission may, after examination by the Management Committee, fix rates of refund which vary according to the areas of destination of the products. Included among the general objectives of the common organization of the markets which the Commission must take into account when exercising that power are the position and prospects of development on the Community market and the world market as well as the economic aspect of the exports envisaged. Such an authorization is in accordance with the case-law of the Court (judgment in Gase 25/70 Einfuhr- und Vorratsstelle fur Getreide und Futtermittel v Köster, Berodt & Co. [1970] ECR 1161, at paragraph 6), a fortiori as the Management Committee procedure allows the Council to reserve, where necessary, its own right to intervene (Judgment in Case 23/75 Rey Soda v Cassa Conguaglio Zucchero [1975] ECR 1279, at paragraphs 10 to 14). It was in the context of that authorization that the Commission adopted Regulation No 1633/80, in which the provisions relating to exports to the Soviet Union were designed to enforce an embargo against that State because of its intervention in Afghanistan.

2) The fundamental principles of law applicable to entitlement to a refund include those set out in Article 29 of Regulation No 2727/75, which provides that the common organization of the market in cereals must take account of the objectives set out in Articles 39 and 110 of the EEC Treaty. The objectives set out in Article 110 of the EEC Treaty relate to commercial policy and, more particularly, to the harmonious development of world trade. An embargo is one of the measures which may be taken on the basis of Community provisions relating to commercial policy. Such an interpretation is consistent with Council practice (see Council Regulation (EEC) No 596/82 of 15 March 1982 amending the import arrangements for certain products originating in the USSR (Official Journal 1982 L 72, p. 15) and Council Regulation (EEC) No 877/82 of 16 April 1982 suspending imports of all products originating in Argentina (Official Journal 1982 L 102, p. 1). It has been accepted by the Court, which has taken the view that Article 110 of the Treaty could legally justify the total suspension of imports (judgment in Case 245/81 Edeka Zentrale AG v Germany [1982] ECR 2745, at paragraph 22) and that the implementation of a Community policy relating to external trade and the stabilization of the market constituted two legitimate objectives (judgment in Case 52/81 Faust v Commission [1982] ECR 3745, at paragraph 23). The measures the validity of which is disputed were likewise justified by the need to ensure harmonious development of the market. They corresponded to the conclusions of the General Affairs Council of 15 January 1980 adopted pursuant to the declaration of the nine Member States on the intervention of the Soviet Union in Afghanistan (Bulletin of the European Communities I-1980, pp 7 and 8). In those conclusions, the Commission was requested to adopt the measures necessary, so far as cereals and their derivatives were concerned, to prevent traditional deliveries from the United States of America to the Soviet Union being replaced, in view of the sanctions imposed by the United States, by exports from the Community. Provision was also made for the establishment of a consultation procedure for the principal exporting countries which would make it possible to avoid disruption of the world market. It follows from the foregoing that Regulation No 1633/80 also took account of the objective of market stabilization set out in Article 39 of the Treaty. If the Community had not imposed an embargo, this would have led the United States to take retaliatory measures or other measures likely to destabilize the market.

3) The Commission was for those reasons entitled to adopt Regulation No 1633/80 without the need for express authorization by the Council. Moreover, and in any event, the Commission points out that this regulation is in accordance with the official position taken by the Council of Ministers, as expressed in the above conclusions of 15 January 1980, and with the resolution adopted on 15 February 1980 by the European Parliament, which called on the Commission to ‘impose an immediate embargo on all sales of surplus commodities to Russia involving subsidies’ (Official Journal 1980 C 59, p. 56). The Hauptzollamt did not submit any observations on the validity of Regulation No 1633/80.

III — Replies to the questions put by the Court

1. Questions put to the Commission and the parties in the main proceedings

The Commission and the parties to the main proceedings are requested to reply to the following questions:

Why does Commission Regulation No 1633/80 fixing the export refunds on cereals and on wheat or rye flour, groats and meal provide, in the case of wheat flour having an ash content of 0 to 520 mg/100 g, for a higher export refund tha'n that which applies to flour with an ash content of 521 to 600 mg/100 g?

Why is this distinction not drawn in other regulations dealing with rates of refund (in Commission Regulations No 1715/77 and No 1006/80, which fix the export refunds applicable to cereals and wheat or rye flour, groats and meal, it is totally absent, while in Commission Regulation No 1221/80 it features only with regard to wheat flour for export to countries other than the Soviet Union)?

Replies:

(a) The Commission's reply

It is vital, when fixing the export refunds applicable to flour, to draw a distinction on the basis of the ash content in order to take account of the factors mentioned in Article 2 of Regulation No 2746/75. The refund applicable to flour is derived from the refund applicable to wheat and flour with a high ash content is produced from a smaller quantity of wheat than flour with a low ash content. That is why, in accordance with Regulation No 1633/80, the rate of refund applicable to flour with an ash content of 1651 to 1900 mg/100 g is the lowest rate while that applicable to flour with an ash content of 0 to 520 mg/100 g is the highest rate.

The absence of a distinction in respect of the refund applicable to the two maximum categories during the period of validity of Commission Regulations No 1715/77 and No 1006/80 can be explained by the fact that it was necessary at that period, in view of the data on the export markets, to ensure that the second category, of less value, should enjoy the same rate of export refund as the first category.

The absence of a distinction in Regulation No 1221/80 of 14 May 1980 between the rates of refund for exports to the Soviet Union for the two maximum categories can be explained by the fact that that refund was fixed on a flat-rate basis at a low level. As will also be obvious from the rates of refund for exports to the Soviet Union with a'higher ash content, those rates of refund were fixed on a flat-rate basis, as an embargo measure, to rounded amounts which were between 30 and 40 ECU lower than the rates of refund applicable to other countries, a situation which rendered it practically impossible to export profitably to the Soviet Union.

(b) Reply of Bremer Rolandmiihle

Bremer Rolandmühle is unaware of the factors which led the Commission to provide in Regulation No Î633/80, over a relatively short period, for a higher export refund for wheat flour with an ash content of 0 to 520 mg/100 g than for flour with an ash content of 521 to 600 mg/100 g. This differentiated refund obviously lacked any basis since it was again discontinued with effect from 5 May 1983. The fact that the 521 to 600 mg category has now been abolished would suggest that this limit was arbitrary and did not correspond to an objective qualitative differentiation.

(c) Reply of Becher

Becher is unaware of the reason why, in the case of exports to ‘other third countries’, Regulation No 1633/80 should have provided a higher refund for wheat flour with an ash content of 0 to 520 mg/100 g than for flour with an ash content of 521 to 600 mg/100 g.

It is also unaware of the reason why this distinction does not feature in the other regulations on rates of refund cited by the Court. A differentiated refund was made for the first time with effect from 15 May 1980, and then only for other third countries. Subsequently, with effect from 1 July 1983, the refund has always been identical for the two categories of flour. Commission Regulation (EEC) No 3236/90 of 8 November 1990 (Official Journal 1990 L 310, p. 16) grouped the two categories under the single product code 11010000100. This shows that the difference in ash content cannot be a criterion capable of supporting the view of the Hauptzollamt and the Commission that the flour exported was a different product.

(d) Reply of Getreide-Import

In order to reply to the questions put by the Court, Getreide-Import can only refer to the recitals published in the preambles to the Commission regulations. It is unaware of the internal factors taken into account by the Commission or by the Management Committee for cereals involved in the procedure for drafting those regulations.

Getreide-Import cites the fourth recital in the preamble to Regulation No 1633/80 and the first recital in the preamble to Regulation No 162/67 and concludes therefrom that refunds which vary according to ash content do in fact take account of the difference in the quantity of cereals necessary for the manufacture of the product. The ash content makes it possible to use a standard method for the calculation of that quantity of cereals, in accordance with the second recital in the preamble to Regulation No 162/67.

Getreide-Import does not know why the Commission did not apply in a consistent manner throughout the regulations the method of differentiation and determination which it chose in the basic regulations. The recitals in the preambles to the regulations cited by the Court fail to indicate any reason which would justify a departure from the principle that export refunds should be fixed in accordance with ash content.

In Regulation No 1221/80, the calculation of export refunds on the basis of the quantities of cereals required for their manufacture is in principle laid down in the recitals in the preamble, in the same terms as in Regulation No 1633/80 (see fourth recital in the preamble). The fact still remains, however, that the annex setting out the amounts of refunds draws distinctions in respect of exports to the Soviet Union.

(e) Reply of the Hauptzollamt

The Hauptzollamt states that it is unable to reply to the questions put by the Court.

2. Questions put to the Hauptzoüamt

First question

The Hauptzollamt is requested to set out the reasons why, in connection with the application of Council Regulation No 565/80 on the advance payment of export refunds in respect of agricultural products, it did not apply the rate of 0 ECU laid down, in the case of exports to the Soviet Union, by Commission Regulations No 1480/80 and No 1633/80 fixing the export refunds on cereals and on wheat or rye flour, groats and meal, in order to determine the amount of prepaid refunds to which Bremer Rolandmühle Erling & Co. and Kurt A. Becher GmbH & Co. KG would have been entitled (Case C-5/90).

Reply

The following is a summary of the information supplied by the Hauptzollamt:

a) The ad hoc association formed by the Bremer Rolandmühle and Becher undertakings held export licences for which the rate of refund applicable on 3 July 1980 had been fixed in advance. In respect of the quantity of 6973400 kg of wheat flour there indicated, the association submitted on 27 November 1980 a payment declaration pursuant to Article 2 of Regulation No 798/80 in which it undertook to manufacture cereal flour from non-denatured wheat with an ash content between 0 and 500 -mg/100 g corresponding to position 1101102001 (flour) and to export it outside the Community within the prescribed period.

b) In accordance with Article 3(2)(b) of Regulation No 798/80, the date of 27 November 1980 was therefore the relevant date for determining any adjustments to the amount of refund fixed in advance. In the present cases, this adjustment consisted in the application of:

the monthly increases provided for under Council Regulations (EEC) No 1550/79 of 24 July 1979 (Official Journal 1979 L 188, p. 5) and No 1875/80 of 15 July 1980 (Official Journal 1980 L 184, p. 10), to be added to the threshold prices (Commission Regulations (EEC) No 1594/79 of 26 July 1979 (Official Journal 1979 L 189, p. 44) and No 1888/80 of 16 July 1980 (Official Journal 1980 L 184, p. 35));

the corrective amount provided for under Commission Regulation (EEC) No 1634/80 of 26 June 1980 (Official Journal 1980 L 162, p. 48).

c) The 1979/1980 marketing year, during which the rate of refund in force on 3 July 1980 had been fixed in advance, ended on 31 July 1980. The 1980/1981 marketing year, which included the determinant date (27 November 1980), began on 1 August 1980. The amount paid in advance, therefore, had to be calculated under Articles 4 and 6 of Regulation No 2746/75 in accordance with the method of calculation of refunds fixed in advance for markets extending over more than two marketing years.

d) The above factors led the Hauptzollamt in this case to accept a rate of refund of:

ECU 27.96/tonne for exports to the Soviet Union (for a rate of refund fixed in advance of ECU 0/tonne);

ECU 102.96/tonne for exports to other third countries (for a rate of refund fixed in advance of ECU 75/tonne).

Second question

The Hauptzollamt is requested to set out the exact calculation, supported by the Community provisions applied, of the amount of advance refunds paid to the above undertakings and to Getreide-Import GmbH (in Cases C-5/90 and C-206/90) and of the amounts claimed from those undertakings.

Reply

With reference to the provisions of Community law applied, the Hauptzollamt sets out the calculation of amounts paid and amounts claimed, drawing a distinction between monetary compensatory amounts, minimum increases and export refunds.

The calculations supplied by the Hauptzollamt make it clear in particular that:

a) the rates of refund mentioned in the reply to the previous question were applied for the purpose of determining the amounts of refunds paid to the undertakings in question;

b) after the finding by the customs authorities that the flour actually exported did not correspond to the characteristics mentioned in the payment declaration, the Hauptzollamt chose the rates of refund applicable at the date of export in order to calculate the amount of the refunds due to those undertakings, namely:

for the ad hoc association Bremer Rolandmühle and Becher (Case C-5/90):

for exports to countries other than the Soviet Union completed before the expiry of the period of validity of the export licences (30 November 1980): a rate of ECU 98.96/tonne;

for other exports:

to countries other than the Soviet Union: a rate of ECU 37.90/tonne (in 1980) and ECU 68.25/tonne (in 1981);

to the Soviet Union : a rate of ECU 0/tonne.

for the ad hoc association Bremer Rolandmühle and Getreide-Import (Case C-206/90), all exports of which were carried out after the expiry of the period of validity of the export licences (30 November 1980): a rate of ECU 37.90/tonne.

3. Questions put to the Commission

First question

The Commission is requested to provide the following details on Article 10(4)(b) and (c) of Regulation No 798/80, as amended by Regulation No 3445/85:

a) are the mechanisms for calculating the amount to be reimbursed by the trader under the first and second indents of Article 10(4)(b) identical and do they have the object of requiring the trader to pay (as specified by the Court in its judgment in Plange Kraftfutterwerke, cited above) the difference between the amount of the refund paid in advance and that of the refund which the trader should have obtained, plus a supplement of 20% of that difference?

b) for what reasons was the text of Article 10(4)(b) amended by Regulation No 3445/85? Does that amendment correspond to an amendment in the calculation of the amount to be repaid vis-à-vis the calculation provided for in the original provisions of Regulation No 798/80?

c) what amount(s) is (are) referred to by the words (in the French version) ‘[these latter two amounts] increased by 20%’ (first indent of Article 10(4)(b)), this reference to the latter two amounts featuring, inter alia, in the Italian and German language versions and absent in the English version, and ‘increased by 20%’ (second indent of Article 10(4)(b))?

d) is the mechanism for calculating the amount to be repaid by the trader under (c) based on the principles laid down in the judgment in Plange Kraftfutterwerke?

The Court would be grateful if the Commission could provide examples containing figures in its replies to the above questions.

Reply

In the Commission's opinion, Article 10(4)(b) and (c) of Regulation No 798/80 is not applicable in the present case since a product other than that mentioned in the payment declaration was manufactured. After this preliminary remark, the Commission makes the following replies to the Court's questions:

a) it is correct that if Article 10(4)(b) was applicable, the difference, plus 20%, between the amount of refund paid in advance and the amount of refund due would have to be repaid. Example : Amount of refund paid in advance 100 Amount of refund due — 70 30 Reimbursement 30 + 20% 36 In mathematical terms, the same calculation is expressed differently in the regulation. Security 120 Amount of refund due: 70 + 20% — 84 Reimbursement 36

b) The recitals in the preamble to Regulation No 3445/85 make it clear that Article 10(4) of Regulation No 798/80 was amended in order to reduce the effects of the minimum security at the time of reimbursement. The second sentence of Article 7(1) does not express this minimum security as a percentage but provides that it should not be less than ECU 3 per 100 kilograms net. In accordance with Article 10(4)(c), which was added by Regulation No 3445/85, the difference between the amount of the refund paid in advance and the amount due is not increased by 20% but by the percentage, which is necessarily higher, calculated by comparing the amount of the minimum increase with the amount paid in advance. Example: as under (a), but the minimum increase is 40, or 40% of the amount of the refund of 100: this gives the following calculation: Amount of refund paid in advance 100 Amount of refund — 70 30 Reimbursement 30 + 40% 42

c) According to the two indents of Article 10(4)(b), the increase relates to the sum of the amount of the refund due and the monetary compensatory amount. The difference in formulation may be explained by the fact that, in the first case, the sum consists of a positive and a negative amount, while the second involves the simple addition of two positive amounts. Examples : — for the first indent: A differentiated refund is applicable; the product is exported to a country other than that originally indicated, for which a lower refund is applicable: Notional refund 100 Negative monetary compensatory amount 10 Advance payment 90 Security 108 Amount of refund due 70 Reimbursement = 108 —(70 + 20% -10 +20%) =108-(84-12) = 36 — for the second indent: With the same values, but this time with a positive monetary compensatory amount: Notional refund 100 Positive monetary compensatory amount 10 Advance payment 110 Security 132 Amount of refund due 70 Reimbursement = 132 —(70 + 10 = 80 + 20%) = 132-96 = 36

d) The Court's judgment in Plange Kraftfutterwerke was not delivered until after the adoption of Regulation No 3445/85. As the example under (a) illustrates, the result derived from the method of calculation introduced by that regulation is the same as that held by the Court to be correct at paragraph 19 of its judgment.

Second question

The Commission is requested to specify the manner in which checks to ensure compliance with the period within which goods must be exported (Article 11(3) of Regulation No 798/80) are normally carried out.

Reply

Checks to ensure compliance with the period within which goods must be exported are normally carried out through the attachment by the customs authorities of a special note to the export declaration form when the goods have in fact left the customs territory of the Community.

Third question

The Commission is requested to state how it reached the conclusion that the fixing of export refunds at zero rate (for exports to the Soviet Union under Regulation No 1633/80) was capable — in the absence of an embargo — of preventing flour exports from the United States of America being replaced by deliveries from the European Community.

Reply

Flour is a produce on the world market which is not exclusively manufactured in the United States of America and the European Community. At the period in question, the price on the world market (as is clear from the refund fixed in the annex to Regulation No 1633/80 ‘for exports to other third countries’) was lower than the Community price by some ECU 75/tonne. In those circumstances, exports at the Community price had no chance of being purchased on the Soviet market. The fixing of refunds at zero rate thus had the effect of an embargo.

Fourth question

The Commission is requested to state why it did not set out the factors relating to the above in the preamble to that regulation.

Reply

The periodic fixing of refunds is based essentially on constantly changing data concerning the markets of third countries and the Community (Article 2 of Regulation No 2746/75).

They are for that reason frequently amended, with the result that a zero refund rate may suddenly be fixed, without any reasons of a political nature. Traders involved have grown used to this; through the advance fixing of refunds, they are also in a position to protect themselves from the economic risk linked to refund fluctuations.

In those circumstances, it is sufficient that the Commission should provide general reasons for its regulations on refunds by reference to the different criteria to be taken into consideration under the Council's implementing regulation (in this case, Regulation No 2746/75).

The regulation on refunds thus discloses ‘the essential objective pursued by the institution’, as required by the Court in its case-law.

On the other hand, it cannot be required that the statement of reasons on which regulations are based should ‘specify the often very numerous and complex matters of fact or of law dealt with in the regulations, provided that the latter fall within the general scheme of the body of measures of which they form part’ (judgment in Case 250/84 Endemia Zuccherifici Nazionali SpA and Others v Cassa Conguaglio Zucchero and Another [1986] ECR 117, at paragraph 38).

F. Grévisse

Judge-Rapporteur

1 Language of the case: German.