Report for the Hearing in Case C-334/90
I — Facts
Marichal-Margrève SPRL (hereinafter referred to as ‘the company’) imported maize cakes into Belgium from France between 5 March 1982 and 17 May 1983. The Centra] Office for Quotas and Licences of the Belgian Ministry for Economic Affairs (hereinafter referred to as ‘the Central Office’) granted the company monetary compensatory amounts totalling BFR 311192 in respect of the imports made between 5 March 1982 and 2 February 1983.
The maize cakes were forage for use in animal feeding containing more than 30% by weight of starch and less than 10% by weight of milk products. They therefore fell within subheading 23.07 BI c) 1 of the Common Customs Tariff in the version then in force.
The monetary compensatory amounts introduced by Council Regulation (EEC) No 974/71 of 12 May 1971 (Official Journal, English Special Edition 1971(1), p. 257), amended most recently in respect of the period in question by Regulation (EEC) No 109/83 of 17 January 1983 (Official Journal 1983 L 16, p. 3), (hereinafter referred to as ‘MCAs’) were established for that period by Commission Regulations (EEC) No 2901/81 of 7 October 1981 (Official Journal 1981 L 288, p. 1), No 1071/82 of 5 May 1982 (Official Journal 1982 L 124, p. 1) and No 1235/82 of 19 May 1982 (Official Journal 1982 L 142, p. 1), each one having been amended on several occasions.
Each of those regulations contained as note (9) to Pan 1 of Annex I (fixing the MCAs for cereals) a provision applicable in particular to products falling within subheading 23.07 BI c) 1 of the Common Customs Tariff and adopting the provisions of Article 1(1) of Commission Regulation (EEC) No 495/79 of 14 March 1979 on the application of MCAs in respect of certain cereal-based compound feedingstuffs (Official Journal 1979 L 65, p. 14).
According to those provisions, in the case of products containing products falling within heading 07.06 (manioc, arrowroot, salep, Jerusalem artichokes, sweet potatoes and other similar roots and tubers with high starch or inulin content) or within subheading 11.04 C (flour and meal of sago and of roots and tubers failing within heading 07.06) of the Common Customs Tariff, no MCA is to be granted on the cereal constituent.
The second indent of Article 1(1) of Regulation No 495/79 provides that:
‘When completing customs formalities... for goods being imported into a Member Sute the currency of which has depreciated ... the applicant must state in the declaration provided for this purpose the complete composition of the product and the exact content by weight of non-milk constituents broken down by tariff heading.’
Checks carried out by the Central Office after payment of the MCAs referred to above revealed that the company had not, contrary to those provisions, stated the complete composition of the imported product and the exact content by weight of non-milk constituents broken down by tariff heading when completing customs formalities.
By letter dated 20 December 1983, the Central Office informed the company that since that failure caused it to forfeit any entitlement to MCAs, it had to repay BFR 311192 which had been unduly granted to it and that it could not expect to be granted MCAs for the imports made between 8 February and 17 May 1983.
On 9 January 1984 the company sent to the Central Office a copy of the request for information sent by its French supplier to the French customs authorities in order to establish the tariff heading of the product in question. The exact composition by weight of its constituents was stated in that request.
On 30 January 1984 the Central Office replied to the company and stated that as the information requested had not been furnished at the time when the customs formalities were completed, the conditions applied by the Community rules to the grant of MCAs had not been satisfied and that, accordingly, the MCAs had been wrongly paid to the company. It added that the information contained in the document produced by the company still did not completely satisfy the requirements of the Community rules, as the tariff heading of the constituents had not been stated.
By letter dated 21 February 1984 the company informed the Central Office that it formally disputed the application of note (9) to part 1 of Annex I of the regulations establishing the MCAs and it therefore refused to repay the amounts which had been claimed from it.
On 23 May 1984 the Central Office informed the company that since a reexamination of its file had not revealed anything new, it remained liable to pay the amounts claimed and that, unless payment was made within two weeks, proceedings to recover the amount would be instituted.
Following several unsuccessful demands for payment, the Belgian State brought an action against the company before the Tribunal de Première Instance (Court of First Instance), Verviers, on 2 June 1988 for payment of BFR 311192 together with interest on that sum from 1 January 1984.
The company contended that the application should be dismissed and counterclaimed against the Belgian State for payment of BFR 150000 as a provisional sum in respect of the MCAs which it considered to be due for imports made between 8 February and 9 May 1983.
By order dated 22 October 1990 the Tribunal de Première Instance, Verviers, being of the opinion that the outcome of the dispute depended on the interpretation of Commission Reguládon No 495/79 of 14 March 1979, stayed the proceedings and requested the Court to give a preliminary ruling on the following two questions pursuant to Article 177 of the EEC Treaty:
‘(1) Does it follow from the rules of Community law, in particular Commission Regulation (EEC) No 495/79 of 14 March 1979, that an economic operator loses irretrievably all entitlement to monetary compensatory amounts if, when completing customs import formalities carried out in a Member State the currency of which has depreciated, in respect of compound feedingstuffs falling within subheadings 23.07 BI a) 1 or 2, 23.07 BI b) 1 or 2 or 23.07 BI c) 1 or 2 of the Common Customs Tariff, he did not properly complete the customs declaration prescribed for the grant of monetary compensatory amounts, having omitted the particulars required by Regulation (EEC) No 495/79, namely the complete composition of the product and the exact content by weight of non-milk constituents broken down by tariff heading? (2) If the reply to the first question is in the negative, does it follow from the rules of Community law that the operator in question may rectify the matter subsequendy by supplying the prescribed informadon to the national authorities which are responsible for calculating and granting the monetary compensatory amounts in question?’
II — Procedure
The order for reference from the Tribunal de Première Instance, Verviers, was received at the Court Registry on 30 October 1990.
Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted:
by the Belgian State, represented by the Minister for Economic Affairs, acting as representative of the Office Central des Contingents et Licences, assisted by Benoît Cambier and Luc Cambier, of the Brussels Bar,
by the Commission of the European Communities, represented by Patrick Hetsch, a member of its Legal Service, acting as Agent 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. Nevertheless, it decided to put questions to the Belgian State and the Commission.
By decision of 19 June 1991, the Court assigned the case to the Fifth Chamber pursuant to Article 95(1) and (2) of its Rules of Procedure.
III — Summary of die written observations submitted to the Court
The Belgian State observes, as a preliminary point, that the obligation to state the composition of animal feedingstuffs required by Commission Regulation No 495/79 of 14 March 1979, cited above, is intended to elicit the details necessary for the grant of MCAs, the tariff heading of the feedingstuffs under the Common Customs Tariff alone not being sufficient to establish whether it contains products falling within heading 07.06 or subheading 11.04 C that is to say, essentially, manioc or flour of manioc. The repeal of Regulation No 495/79 by Commission Regulation (EEC) No 3623/90 of 14 December 1990 (Official Journal 1990 L 351, p. 36) on the ground that ‘since the introduction of the Combined Nomenclature of goods based on the harmonized system... h has been possible to establish the composition of the product without the need of a detailed description from the parties concerned’, confirms a contrario, in its opinion, the need for such an obligation during the period in question.
With regard to the two preliminary questions, which it proposes to examine together, the Belgian Sute contends, first, that in order to establish that the feedingstuffs intended for animals do not contain manioc or flour of manioc, the Community rules require that the composition of the product be stated at the time when customs formalities are completed in order to enable the customs authorities to check it. This is an essential requirement and failure to comply with it amounts to a waiver of MCAs. A check is difficult, indeed even impossible, after customs have been cleared and, accordingly, any rectification ex post facto must be excluded.
The Belgian Sute argues, secondly, that, although Community rules on MCAs permit derogations regarding the time-limits for production of certain documents, those derogations apply expressly and solely to those cases in which the effectiveness of customs control is not thereby called into question.
In its view, therefore, any economic operator who does not sute the actual composition of the product when completing customs formalities irrevocably loses his rights to MCAs and cannot claim to be entitled to an additional period within which to regularize his situation.
The Commission observes, as a preliminary point, that there is no dispute as to the tariff heading of the product in question (23.07 BI c) 1) or the absence of any right to MCAs for products falling within that heading and composed of products falling within heading 07.06 or subheading 11.04 C. The dispute is concerned solely with the interpretation of the second indent of note (9) of the regulations establishing the MCAs which defines the regime applicable to products falling within subheading 23.07 BI c) 1.
The Commission considers that the answer to the first question should be that an operator, who, when completing customs formalities, does not indicate in the declaration provided for that purpose the complete composition of the imported or exported product loses any right to MCAs applicable to that product.
It maintains that under Article 6(d) of Commission Regulation (EEC) No 1371/81 of 19 May 1981 (Official Journal 1981 L 138, p. 1), as last amended for the period in question by Regulation (EEC) No 2898/81 of 7 October 1981 (Official Journal 1981 L 287, p. 1), the operator is required to declare the composition of the product when that is required for the calculation of MCAs.
Supplementary to that general provision are the provisions specific to products falling within subheading 22.07 BI c) 1, referred to in note (9) to the regulations fixing MCAs and deriving from Regulation No 495/79 of 14 March 1979, which require the operator to declare the complete composition of the product and the exact content by weight of non-milk constituents broken down by tariff heading.
The Commission states that, until 1976, MCAs granted for products falling within subheading 23.07 BI c) 1 took no account of the composition of those products. MCAs granted for products containing manioc (a constituent falling within heading 07.06), flour and meal of manioc (a constituent falling within heading 11.06, then subsequently within subheading 11.04 C) were greater than the MCAs granted for those constituents, even though the use of the products was comparable. That disparity in rates had led to artificial patterns of trade in compound feedingstuffs. To put an end to them, the Commission had, by Regulation (EEC) No 1497/76 of 23 June 1976 (Official Journal 1976 L 167, p. 27), aligned the MCAs for products falling within subheadings 23.07 BI c) 1 and 2 on those for products falling within subheading 07.06. A. Then, since that measure proved to be inadequate, the Commission abolished the MCAs for the ‘cereal’ constituent of products falling within subheadings 23.07 BI c) 1 and 2 by Regulation No 495/79.
According to the Commission, since the entry into force of Regulation No 1497/76 and, a fortiori, since that of Regulation No 495/79, economic operators knew for a fact that the grant of MCAs for feedingstuffs for animals was subject to the declaration, at the time of completing customs formalities, of the complete composition of the product and the exact content by weight of non-milk constituents broken down by tariff heading, which alone made it possible to establish whether the product contained manioc or other products falling within heading 07.06, since the tariff heading description was insufficient in this respect.
In the Commission's view, the customs declaration constitutes an undertaking by the economic operator regarding the composition of the product and is, therefore, a fundamental pan of the system for the grant of MCAs and a condition for, and guarantee of, its effectiveness. It has, in particular, a deterrent effect because a subsequent check can establish the correctness of die declaration and reveal any fraud. The Commission sutes that such a declaration is even more important because in practice there are no systematic controls and reliance is placed on simple spot checks in order to reduce administrative formalities.
As a result, the declaration of the composition of the product by the economic operator is an essential formal requirement which must be fulfilled when clearing customs.
The Commission considers that, in view of the above, the second question put by the national court should be answered in the negative.
According to the Commission, even though the note introduced by Regulation No 495/79 does not provide expressly for forfeiture of the right to MCAs when the declaration of composition is not made, the very aim of the system established by that regulation and the fundamental role which the declaration plays in it preclude any rectification ex post facto because verification of the declaration at that stage is impossible.
The Commission finally notes that the national authorities responsible for administering the Community agricultural mechanisms, to which MCAs are assimilated by virtue of Regulation (EEC) No 2746/72 of the Council of 19 December 1972 (Official Journal, English Special Edition 1972 (28-30 December), p. 64), are obliged, pursuant to Article 8(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970(1), p. 218), to recover sums unduly or irregularly paid and have no discretion as to the expediency of recovering those sums (see the judgment in Joined Cases 146/81, 192/81 and 193/81 BAYWA v BALM [1982] ECR 1503). Moreover, the erroneous grant of MCAs cannot give rise to legitimate expectations on the pan of the debtor (see the judgment in Case 316/86 Hauptzollamt Hamburg-Jonas v Kruken [1988] ECR 2213) and the good faith of the latter is not determinative of whether the MCAs unduly granted should be retained (see judgment in Case 254/85 Irish Grain Board v Minister for Agriculture [1986] ECR 3309).
IV — Answers to die questions put by die Court
A — Questions to the Belgian Government
1. The first question put by the Coun to the Belgian Government is as follows: Commission Regulation No 3623/90 of 14 December 1990 (Official Journal 1990 L 351, p. 36) justifies, in its preamble, the deletion of now (3) to Pan 1 of Annex I to Commission Regulation (EEC) No 1207/90 of 11 May 1990 (Official Journal 1990 L 122, p. 1), which reproduces the provisions of Reguladon (EEC) No 495/79 of 14 March 1979, on the ground that: The Belgian State deals with this reasoning on page 5 of its written observations as follows: The Belgian Sute is asked to sute which deuils are added by the Combined Nomenclature of goods in comparison with the former Common Customs Tariff in respect of products falling within subheading 23.07 BI c) 1 of that tariff and in what way those deuils remove the need for the description of the products required by Regulation No 495/79 of 14 March 1979 in order to calculate the MCAs applicable to those products. The Belgian Government replied that Commission Regulation (EEC) No 4103/88 of 23 December 1988 fixing the MCAs applicable in the agricultural sector and certain coefficients and rates required for their application (Official Journal 1988 L 364, p. 1), introduced into the Combined Nomenclature of goods an additional code (code 7624) specific to manioc- or flour-of-manioc-based compound feedingstuffs for animals. Since the entry into force of that regulation, it is no longer necessary to know the complete composition of the product because the mere reference to the additional code is sufficient to calculate any right to MCAs.
‘since the introduction of the Combined Nomenclature of goods based on the harmonized system, laid down in Council Regulation (EEC) No 2658/87, as last amended by Regulation (EEC) No 3274/90, it has been possible to establish the composition of the product without the need of a detailed description from the parties concerned ... ’
‘Following the amendment of the Combined Nomenclature, the tariff heading of products was sufficient to establish their content, which made it possible to repeal Regulation No 495/79 and which confirms the need for it under the former nomenclature.
At that time it was necessary to obtain details regarding the content of the products which were not revealed by their tariff heading.’
2. The second question put by the Court to the Belgian Government is as follows: It is apparent from the documents before the Court that the Office Central des Contingents et Licences has paid Marichal-Margrève S. p. r. 1. moneury compensatory amounts on 35 occasions when the applications by that company, which did not include deuils of the composition of the imported products, did not enable the amounts which might be payable to it to be calculated. The Belgian Sute is asked to explain how such payments were made possible. The Belgian Government suted that the moneury events of 1982 had led for the fint time in Belgium to the application of a system whereby MCAs were granted (‘negative’ MCAs) and that the departments of the Central Office had omitted initially to uke into account the specific requirements of that type of transaction. They had therefore not examined whether the declarations by the operators conuined the necessary information for the grant of MCAs, such as the composition of the product when cereal-based feedingstuffs for animals were concerned, such formalities not being required in the case of the system applying to ‘positive’ MCAs (levied MCAs) which was the only system operated until then by those departments. When an internal audit at the Central Office revealed these errors, this was communicated to the economic operators and rectification of the files was proposed through presentation of additional information, such as the customs documents enabling the tariff heading of the products to be verified ex post facto.
B — Question to the Commission and the Belgian State
The Court put to the Commission and the Belgian State the following question:
The Tribunal de Première Instance, Verviers, stated at point 3 on page 4 of its judgment of 22 October 1990 that:
‘... Customs authorities more than anyone else ought to be acquainted with the Community legislation (concerning MCAs) and to know that tariff subheading 23.07 BI c) 1 relates to compound feedingstuffs, that no monetary compensatory amount is granted on their “cereal” constituent and that therefore checks must be carried out. ... After all, when crossing the frontier the operator did not hide the fact that he was going to apply for the grant of monetary compensatory amounts since he completed the formalities and forms required for that purpose (in particular document X-10); he merely failed to make the declarations at issue. The customs authorities were thus able to carry out the desired checks without it being necessary for the operator to draw their attention to the matter particularly. Moreover, the question might also be asked whether h is not rather for the customs authorities, who are more acquainted with the Community legislation in the field of intra-Community trade, to have drawn the attention of the operator to the applicable formalities’.
The Commission and the Belgian Sute are asked to give the Court their opinion on these views of the Tribunal de Première Instance.
The Commission's reply
1. The Commission replied that it did not entirely share the views of the Tribunal de Première Instance. First of all, the Commission considers that no diligent operator, particularly one involved in the trade of compound feedingstuffs for animals, could fail, above all after the adoption of Regulation No 495/79 of 14 March 1979, to be aware, first, that MCAs had been reduced and then withdrawn in respect of the ‘cereal’ constituent of compound products falling within subheading 23.07 BI derived from manioc or flour of manioc and, secondly, that the grant of MCAs in respect of the ‘cereal’ constituent of other products falling within this subheading was subject to the full declaration of their non-milk constituents. The Commission also states that such an obligation was not at the time in any way exceptional because it applied to numerous other agricultural products. Finally, it notes that the aim of such a formality was, first, to deter fraud by requiring operators to give an undertaking concerning die composition of the product and, secondly, to alert the national authorities responsible for paying MCAs so that they might check the declaration by taking a sample of the p rodun. Consequently, in the Commission's view, by failing to comply with that mandatory obligation, which was designed to counteract artificiai patterns of trade, was simple to comply with and constituted the only reciprocal obligation for the grant of MCAs, an economic operator automatically forfeited the MCAs to which he would have otherwise been entitled. Accordingly, the Commission considers that a national authority could not be criticized for not drawing the formalities in force to the attention of an operator or for not carrying out a check where no declaration of the complete composition of the product had been made. The Commission contends in this respect that the customs authorities and the disbursing authorities must deal with a considerable number of transactions and that, in the absence of a declaration of the complete composition of the product which would enable identification of those applications for MCAs concerning products subject to a special regime, such as that applying to products falling within subheading 23.07 BI of the Common Customs Tariff, the risk of mistakes being made is increased. Payments made in error can therefore only be uncovered ex post facto, which implies that actions to recover the payments may be commenced at that time. Finally, according to the Commission, although it is entirely open to a national authority to inform operators of the rules concerning the grant of MCAs, in particular when additional requirements are introduced, it cannot be obliged constantly to draw their attention to well-established rules of which they have been aware for a long ume and which they know impose conditions for the grant of MCAs.
Reply by the Belgian Government
2. In reply to the question put, the Belgian Government contends that although acceptance of a customs deciaradon for goods gives rise to a debt by the economic operator when MCAs are levied (‘positive’ MCAs), the grant of MCAs (‘negative’ MCAs) presupposes compliance with certain requirements, namely making an application and lodging documents within the prescribed period. Since the mere customs declaration of a product cannot be treated as an intention subsequendy to file an application for the grant of MCAs, the customs authorities cannot, solely in the light of the documents presented to it, determine whether it is advisable for the operator when passing customs to complete formalities other than those necessary for transit and it is not for those authoriues, in such circumstances, to draw his attention to the need to comply with those formalities. The Belgian Government abo stated that the Royal Decree of 25 October 1971 (Moniteur Belge, 10 November 1971) on the Implementation of Measures emanating from the Competent Institutions of the European Communities (Agricultural Market), as amended by the Royal Decree of 26 June 1976 (Moniteur Belge, 30 June 1976), which was in force at the material rime, provided that: Finally, it contends that in order to avoid formalities, the usefulness of which depends on the economic operator's desire to obtain MCAs, disrupting movements of goods, no specific obligation for the grant of MÇAs had been laid down and the act of presenting to the customs authorities documents containing only the information required for transit had always been regarded, where the latter information was insufficient to give rise to a right to payment of MCAs, to be a voluntary waiver by the operator to complete the formalides necessary to receive the MCAs which it could otherwise claim.
On the import or expon of goods which, in the course of trade between Member States of the European Economic Community, give rise to the levy or grant of amounts referred to in Article 2 and in the Royal Decree of 6 December 1971, died above, an administrative document entitled “X-10 declaration” shall be duly completed by the person concerned, checked and countersigned by the custom authority and forwarded by the latter to the Office Central des Contingents and Licences...
Customs declarations and X-10 declarations concerning goods, the import or export of which gives rise to the levy or grant of amounts referred to in Article 2 of this Decree and in the Royal Decree of 6 December 1971, cited above, must contain all the information necessary to calculate those amounts.
Without prejudice to the imposition of penal sanctions, inaccurate or incomplete declarations may result in the levy of the highest amount or the grant of the lowest amount.’
C — Questions to the Commission
The Court put to the Commission the following questions.
first question
1. The Commission notes at point 7 of its written observations (page 8) that ‘neither the tariff heading of the products in question — 23.07 BI c) 1 — nor the exclusion of any MCAs for compound Jèedingstuffs falling within that subheading are in dispute in the main proceedings since they are composed of products falling within subheading 07.06 or flour of those products’, and contends, at point 8.1 of its written observauons (page 9) that ‘to put an end to artificial trade flows based on the substitution of manioc or other products falling within heading 07.06 for cereals used to constitute the compound feedingstuffs for animals at issue, which was due solely to the availability of an MCA, the Commission has been driven successively to reduce the MCAs for part of those products containing more than 50% of manioc or other products falling within subheading 07.06, and then to withdraw MCAs totally whenever compound feedingstuffs contained those products’. The Court observes that according to Article 1(1) of Commission Reguládon (EEC) No 495/79 of 14 March 1979: The Court asks the Commission to state how these provisions had, as the Commission alleges, the effect of excluding the grant of MCAs for products falling within subheading 23.07 BI c) 1 containing products falling within heading 07.06 or subheading 11.04 C. The Commission replied that compound feedingstuffs for animals falling within subheading 23.07 BI of the Common Customs Tariff are divided into three categories according to their starch content (a constituent which comes under Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the marketing in cereals (Official Journal 1975 L 281, p. 1)), each group being subdivided according to the weight of milk products in the feedingstuffs. The MCAs applicable to those feedingstuffs, calculated first, according to the starch content and, secondly, to the milk-product content, appear in an annex to the regulations fixing the MCAs, either in ‘Part I — Cereals’, where the feedingstuffs contain less than 50% of milk products, or in ‘Part IV —Milk and Milk Products’ if the feedingstuffs contain more than 50% of milk products. In order to put at end to the artificial trade flows in manioc- or flour-of-manioc-based compound feedingstuffs, Article 1(1) of Regulation No 495/79 of 14 March 1979 withdrew the grant of the amounts appearing in Part I (the ‘cereal’ part) of the annex to the regulations fixing the MCAs in the case of manioc- or flour-of-manioc-based feedingstuffs, whereas the amounts set out in Part IV of the annex to those regulations remained applicable to those products.
‘In the case of products containing products falling within heading number 07.06 or subheading 11.04 C of the Common Customs Tariff, no monetary compensatory amount shall be granted on the “cereal” constituent.’
Second question
2. The Commission contends at point 9 of its written observations (page 12) that any rectification of the declaration ex post facto must be excluded because ‘if so amended, the correctness of the declaration could no longer be verified by means of a test sample since the products would already have been used for consumption’. The Court asks the Commission, first, to state whether it considers that verification of the declaration by testing a sample is, in all cases, actually impossible and, secondly, to sute whether other forms of checking are not conceivable and, if not, why that is the case. The Commission sutes that by indicating in its written observations that any rectification ex post facto is to be excluded, it intended to emphasize that the grant of MCAs for feedingstuffs for animals is based on a system of spot checks of goods at the time of import which enable the conformity of the declared composition with the actual composition of the product to be verified. The Commission recognizes that such checks remain possible after import provided that the products remain in their original sute. But it considers that those checks no longer offer any real guarantee that the sampled product and the imported product are the same. The Commission states that it is for this very reason that it has not adopted, for example, any checks on the accounting documents of manufacturers of feedingstuffs, the reliability of which would entail additional checks between the dispatch of the product from its place of manufacture and its import. The Commission therefore considers that the declaration of composition is the best compromise between the requirement that checks be carried out and that administrative formalities be simple. The obligation concerned imposes few restrictions on the operators, presents no particular difficulties for them in implementing it and has been well established in numerous sectors for a long time.
F. Grévisse
Judge-Rapporteur
1 Language of the cast: French.