Court of Justice of the European Communities (including Court of First Instance Decisions)

AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - SUGAR - DENATURING PREMIUM - CONDITIONS FOR GRANT - USE OF THE DENATURED SUGAR FOR ANIMAL FEED - USE OTHERWISE THAN FOR THAT PURPOSE BY THIRD PARTIES - LIABILITY OF THE RECIPIENT OF THE PREMIUM CERTIFICATE
( REGULATION ( EEC ) NO 2049/69 OF THE COUNCIL ; REGULATION ( EEC ) NO 100/72 OF THE COMMISSION )

RECIPIENTS OF DENATURING PREMIUM CERTIFICATES UNDER REGULATION NO 100/72 ARE REQUIRED , IN ACCORDANCE WITH THE PROVISIONS OF THAT REGULATION AND THOSE OF REGULATION NO 2049/69 , TO USE THE DENATURED SUGAR EXCLUSIVELY FOR ANIMAL FEED .

NATIONAL RULES WHICH PROVIDE THAT SUCH PERSONS ARE LIABLE FOR ANY USE OTHERWISE THAN FOR THE INTENDED PURPOSE BY THIRD PARTIES DO NOT CONFLICT WITH COMMUNITY LAW .

IN CASE 77/81
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FIRST CHAMBER OF THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ), FRANKFURT AM MAIN , FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
ZUCKERFABRIK FRANKEN GMBH , OCHSENFURT ,
AND
FEDERAL RREPUBLIC OF GERMANY , REPRESENTED BY THE BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG ( FEDERAL OFFICE FOR THE ORGANIZATION OF AGRICULTURAL MARKETS ), FRANKFURT AM MAIN ,

ON THE INTERPRETATION OF ARTICLE 14 ( 1 ) ( B ) OF REGULATION ( EEC ) NO 100/72 OF THE COMMISSION OF 14 JANUARY 1972 LAYING DOWN DETAILED RULES ON THE DENATURING OF SUGAR FOR ANIMAL FEED ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( I ), P . 21 ),

1 BY AN ORDER DATED 26 FEBRUARY 1981 WHICH WAS RECEIVED AT THE COURT ON 7 APRIL 1981 THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ) FRANKFURT AM MAIN REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY A QUESTION CONCERNING THE INTERPRETATION OF REGULATION ( EEC ) NO 100/72 OF THE COMMISSION OF 14 JANUARY 1972 LAYING DOWN DETAILED RULES ON THE DENATURING OF SUGAR FOR ANIMAL FEED ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( I ), P . 21 ), IN PARTICULAR ARTICLE 14 ( 1 ) ( B ) THEREOF .

2 THE QUESTION AROSE IN THE COURSE OF A DISPUTE BETWEEN A GERMAN SUGAR MANUFACTURER , WHICH AFTER OBTAINING DENATURING PREMIUM CERTIFICATES IN RESPECT OF 114 550 TONNES OF SUGAR IN 1972 DENATURED THAT QUANTITY AND OBTAINED THE DENATURING PREMIUM PROVIDED FOR BY REGULATION NO 2049/69 OF THE COUNCIL OF 17 OCTOBER 1969 LAYING DOWN GENERAL RULES ON THE DENATURING OF SUGAR FOR ANIMAL FEED ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( II ), P . 441 ), AND THE FEDERAL REPUBLIC OF GERMANY , REPRESENTED BY THE BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG ( FEDERAL OFFICE FOR THE ORGANIZATION OF AGRICULTURAL MARKETS ), WHICH CLAIMS THE REFUND OF THE PREMIUMS AS REQUIRED BY GERMAN LAW , PRINCIPALLY ON THE GROUND THAT THE DENATURED SUGAR WAS USED NOT FOR FEEDING BEES BUT AS CORE-BINDER FOR FOUNDRIES .

3 THE PLAINTIFF IN THE MAIN ACTION SOLD THE DENATURED SUGAR TO AN AGRICULTURAL DEALER , STIPULATING THAT THE SUGAR ' ' MUST BE USED ONLY FOR THE FEEDING OF BEES ' ' AND THAT PROOF THAT IT HAD BEEN SO USED MIGHT BE REQUIRED . THE DEALER RESOLD IT TO AN UNDERTAKING WHICH USED IT FOR A PURPOSE OTHER THAN THAT AGREED . ON DISCOVERING THAT FACT THE DEFENDANT DEMANDED REPAYMENT OF THE PREMIUM FROM THE PLAINTIFF IN THE MAIN ACTION .

' 4 THE NATIONAL COURT BEFORE WHICH THE DISPUTE WAS BROUGHT IS OF THE OPINION THAT GERMAN LAW REQUIRES A PREMIUM WHICH HAS BEEN UNDULY PAID TO BE RETURNED , BUT IS IN DOUBT WHETHER THE PLAINTIFF IN THE MAIN ACTION WAS WRONGLY IN RECEIPT OF THE PREMIUM IN THIS INSTANCE , FOR IT HAD FULFILLED ALL THE REQUIREMENTS LAID DOWN BY COMMUNITY LAW FOR PAYMENT OF THE PREMIUM , THERE BEING NO CLEAR INDICATION IN REGULATION NO 100/72 THAT THE UNDERTAKINGS CONCERNED ARE REQUIRED TO USE THE PRODUCT FOR THE PURPOSE ENVISAGED .

5 THE NATIONAL COURT THEREFORE REFERRED THE FOLLOWING QUESTION TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING :
' ' IS THE RECIPIENT OF A DENATURING PREMIUM CERTIFICATE UNDER REGULATION ( EEC ) NO 100/72 OF THE COMMISSION OF 14 JANUARY 1972 LAYING DOWN DETAILED RULES ON THE DENATURING OF SUGAR FOR ANIMAL FEED ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( I ), P . 21 ) OBLIGED BY THE WORDING OF ARTICLE 14 ( 1 ) ( B ) THEREOF TO USE THE DENATURED SUGAR ONLY FOR ANIMAL FEED AND IS HE LIABLE FOR ANY USE OTHERWISE THAN FOR THAT PURPOSE BY THIRD PARTIES?
' '
THE FIRST PART OF THE QUESTION
6 THE BASIS FOR THE REPLY TO BE GIVEN TO THE QUESTION WHETHER IT IS A REQUIREMENT OF COMMUNITY LAW THAT THE RECIPIENT OF A DENATURING PREMIUM CERTIFICATE MUST USE THE DENATURED SUGAR EXCLUSIVELY FOR ANIMAL FEED MAY BE ELICITED BY FIRST INTERPRETING THE WORDING OF THE RELEVANT PROVISIONS OF REGULATION NO 100/72 AND THEN CONSIDERING IT IN THE LIGHT OF THE PURPOSE OF THE COMMUNITY RULES IN QUESTION .

7 ARTICLES 14 , 21 AND 24 OF REGULATION NO 100/72 LAY DOWN THE CONDITIONS FOR PAYMENT OF THE DENATURING PREMIUM . THE PREMIUM MAY BE PAID ONLY IF THE SUGAR HAS BEEN DENATURED UNDER SUPERVISION IN AN APPROVED ESTABLISHMENT AND BY ONE OF THE PROCESSES LISTED IN THE ANNEX TO THE REGULATION . IT IS ALSO PROVIDED THAT THE PREMIUM MAY NOT BE PAID UNTIL PROOF IS FURNISHED THAT THE SUGAR WAS DENATURED UNDER THE CONDITIONS LAID DOWN IN THE DENATURING PREMIUM CERTIFICATE .

8 WHILST THOSE PROVISIONS DO NOT STATE THAT PAYMENT OF THE PREMIUM DEPENDS ON THE DENATURED SUGAR ' S BEING USED FOR ANIMAL FEED , AND ALTHOUGH IN ADDITION THE WORDING OF REGULATION NO 100/72 DOES NOT LAY DOWN ANY COMMUNITY PROVISIONS CONCERNING A POSSIBLE REFUND OF THE DENATURING PREMIUM , ARTICLE 19 ( 1 ) PROVIDES THAT :
' ' THE MEMBER STATES SHALL APPOINT COMPETENT AGENCIES TO SUPERVISE DENATURING AND TO ENSURE THAT THE DENATURED SUGAR IS ONLY USED FOR ANIMAL FEED ' ' .

9 IT FOLLOWS FROM THAT PROVISION THAT ALTHOUGH THE COMMUNITY LEGISLATURE DOES NOT REFER EXPRESSLY TO AN OBLIGATION TO USE THE PRODUCT FOR ITS INTENDED PURPOSE IT HAS IMPOSED ON THE MEMBER STATES A DUTY TO EXERCISE THE SUPERVISION NECESSARY TO ENSURE THAT THAT PURPOSE IS MET SINCE THEY ARE REQUIRED TO ENSURE THAT AFTER THE DENATURING THE SUGAR IS PUT TO THAT USE .

10 THE FACT THAT THERE IS AN OBLIGATION TO USE THE DENATURED SUGAR FOR ANIMAL FEED IS ALSO INDICATED NOT ONLY IN THE TITLE OF REGULATION NO 100/72 OF THE COMMISSION BUT ALSO IN THE IMPERATIVE AND UNAMBIGUOUS TERMS OF THE SIXTH AND SEVENTH RECITALS IN THE PREAMBLE , ACCORDING TO WHICH THE COMMISSION HAS ADOPTED TWO MEASURES TO ENSURE THAT THE SUGAR IS PUT TO ITS INTENDED USE , THE FIRST BEING THE ESTABLISHMENT OF SPECIFIC DENATURING PROCESSES AND THE SECOND BEING THE SUPERVISION WHICH THE MEMBER STATES MUST EXERCISE BY ADOPTING ALL NECESSARY MEASURES TO ENSURE THAT THE DENATURED SUGAR IS USED EXCLUSIVELY FOR ANIMAL FEED .

11 THE EFFICACY OF THE SYSTEM OF CHECKS PROVIDED FOR BY THE REGULATION WOULD BE SERIOUSLY IMPAIRED IF NO CONSEQUENCES WERE ATTACHED TO ITS APPLICATION BECAUSE THERE WOULD NO LONGER BE ANY GUARANTEE THAT THE DENATURED SUGAR WOULD BE USED FOR ITS INTENDED PURPOSE , AS ANIMAL FEED . THE CONCLUSION MUST THEREFORE BE THAT IT FOLLOWS FROM THE WORDING OF REGULATION NO 100/72 THAT THE RECIPIENT OF A DENATURING PREMIUM IS REQUIRED TO USE THE DENATURED SUGAR EXCLUSIVELY FOR ANIMAL FEED .

12 THAT CONCLUSION IS ALSO BORNE OUT BY THE TITLE AND ARTICLE 1 OF REGULATION NO 2049/69 OF THE COUNCIL , IN WHICH REGULATION NO 100/72 HAS ITS LEGAL FOUNDATION , WHERE IT IS PROVIDED IN ARTICLE 1 ( 2 ) THAT :
' ' SUGAR IN RESPECT OF WHICH A DENATURING PREMIUM HAS BEEN GRANTED SHALL BE USED ONLY FOR ANIMAL FEED ' ' .

13 FURTHER LIGHT IS CAST UPON THOSE PROVISIONS BY THEIR GENERAL PURPOSE WHICH IS DESCRIBED IN PARTICULAR IN THE SECOND AND THIRD RECITALS IN THE PREAMBLE TO REGULATION NO 2049/69 . THEY SHOW THAT THE AIM OF THE COMMUNITY LEGISLATURE IN THESE RULES IS TWO-FOLD : TO RELIEVE CONGESTION ON THE SUGAR MARKET AND TO ABSORB SURPLUSES BY RESERVING THEM FOR ANIMAL FEED BY MEANS OF DENATURING .

14 IT IS THEREFORE CLEAR THAT TRADERS TO WHOM THESE COMMUNITY RULES APPLIED - THAT IS , ACCORDING TO ARTICLE 19 ( 2 ) OF REGULATION NO 100/72 , TRADERS OPERATING ' ' FACTORIES MANUFACTURING SUGAR ' ' OR ' ' FACTORIES MAKING COMPOUND FEEDINGSTUFFS ' ' OR ' ' WAREHOUSES IN WHICH DENATURING CAN BE EFFECTIVELY SUPERVISED ' ' - COULD NOT INTERPRET THE PROVISIONS OF COMMUNITY LAW OTHERWISE THAN AS MEANING THAT ISSUE OF THE CERTIFICATE ENTAILED AN OBLIGATION TO DENATURE THE SUGAR UNDER THE APPROPRIATE CONDITIONS , AND THAT THEY ALSO REQUIRED THAT THE DENATURED SUGAR BE USED EXCLUSIVELY FOR ANIMAL FEED .

15 THAT IS EXACTLY HOW THE PLAINTIFF IN THE MAIN ACTION UNDERSTOOD THEM , MOREOVER , BECAUSE IT INFORMED ITS PURCHASER THAT THE DENATURED SUGAR ' ' MUST BE USED ONLY FOR THE FEEDING OF BEES ' ' .

16 THE REPLY TO THE FIRST PART OF THE QUESTION RAISED BY THE NATIONAL COURT MUST THEREFORE BE THAT RECIPIENTS OF DENATURING PREMIUM CERTIFICATES UNDER REGULATION NO 100/72 ARE REQUIRED , IN ACCORDANCE WITH THE PROVISIONS OF THAT REGULATION AND THOSE OF REGULATION NO 2049/69 , TO USE THE DENATURED SUGAR EXCLUSIVELY FOR ANIMAL FEED .

THE SECOND PART OF THE QUESTION
17 THE SECOND PART OF THE QUESTION ASKS IN ESSENCE WHETHER NATIONAL PROVISIONS WHICH REQUIRE THE RECIPIENT OF A DENATURING PREMIUM TO REFUND IT IF THE DENATURED SUGAR HAS NOT BEEN USED FOR ANIMAL FEED EVEN IF IT IS A THIRD PARTY WHO IS RESPONSIBLE FOR THE MISUSE GIVING RISE TO REFUND , ARE APPLICABLE IN THE LIGHT OF COMMUNITY LAW .

18 FOR THE PURPOSES OF THE REPLY IT MUST BE RECALLED , FIRST , THAT IT IS PART OF THE GENERAL SCHEME OF THE RELEVANT COMMUNITY PROVISIONS THAT MEMBER STATES MUST TAKE ALL NECESSARY STEPS TO ENSURE THAT THE DENATURED SUGAR IS USED SOLELY FOR ANIMAL FEED .

19 THE NATIONAL AUTHORITIES THEREFORE ENJOYED FULL DISCRETION IN LAYING DOWN PENALTIES DESIGNED TO ENSURE THAT THE PROVISIONS OF COMMUNITY LAW WERE OBSERVED .

20 AS REGARDS THE RELEVANT COMMUNITY RULES , FIRST , THE WORDING , THE GENERAL SCHEME AND THE AIM OF THE COMMUNITY PROVISIONS WHICH ARE APPLICABLE ALL INDICATE THAT THE GRANT OF A DENATURING PREMIUM IS A SPECIAL MEASURE DESIGNED TO RELIEVE CONGESTION ON THE SUGAR MARKET THEREBY PROVIDING ANIMAL FEED UNDER PARTICULARLY FAVOURABLE CONDITIONS . SUITABLE PRECAUTIONS HAD THEREFORE TO BE TAKEN IN ORDER TO ENSURE THAT SUCH DENATURED SUGAR WAS NOT DIVERTED FROM THAT INTENDED USE BUT WAS ACTUALLY USED AS ANIMAL FEED . THE ARRANGEMENTS MADE FOR THAT PURPOSE WOULD NOT BE EFFECTIVE IF THE RECIPIENT OF THE DENATURING PREMIUM CERTIFICATE WAS NO LONGER LIABLE WHERE A SUBSEQUENT PURCHASER FAILS TO USE THE DENATURED SUGAR FOR ITS INTENDED PURPOSE , WHEN THE RECIPIENT HAS INCURRED A LEGAL OBLIGATION TOWARDS THE COMPETENT AUTHORITY TO USE THE DENATURED SUGAR SOLELY AS ANIMAL FEED .

21 IN THE CIRCUMSTANCES NATIONAL RULES WHEREBY THE RECIPIENT OF A PREMIUM WHICH HAS BEEN PAID WITHOUT THE CONDITIONS LAID DOWN BY COMMUNITY LAW AS TO EVENTS SUBSEQUENT TO THE DENATURING HAVING BEEN OBSERVED MIGHT BE ASKED TO REFUND THE PREMIUM EVEN IF THE USE CONTRARY TO THE INTENDED PURPOSE WAS ATTRIBUTABLE TO THIRD PARTIES , DOES NOT CONFLICT WITH THE RELEVANT COMMUNITY PROVISIONS .

22 IT MUST NOW BE CONSIDERED WHETHER SUCH RULES ARE COMPATIBLE WITH SUPERIOR RULES OF COMMUNITY LAW , IN PARTICULAR WITH THE PRINCIPLES OF LEGAL CERTAINTY AND PROPORTIONALITY INVOKED BY THE PLAINTIFF IN THE MAIN ACTION .

23 AS REGARDS THE PRINCIPLE OF LEGAL CERTAINTY IT IS QUITE PLAIN FROM ALL THE CONSIDERATIONS SET OUT ABOVE THAT TRADERS TO WHOM THE PROVISIONS IN QUESTION APPLY WERE FULLY AWARE OF THE REQUIREMENT THAT THE DENATURED SUGAR MUST BE USED EXCLUSIVELY FOR ANIMAL FEED . THEY OUGHT THEREFORE REASONABLY TO HAVE EXPECTED THAT PENALTIES WOULD BE PROVIDED FOR FAILURE TO OBSERVE THAT REQUIREMENT AND THAT SUCH PENALTIES WOULD BE INCURRED BY THE ONLY PERSON WHO WAS IN A LEGAL RELATIONSHIP WITH THE COMPETENT AUTHORITIES OF THE MEMBER STATES .

24 IN THOSE CIRCUMSTANCES NATIONAL RULES PROVIDING FOR THE REFUND OF PREMIUMS UNDULY PAID , EVEN WHEN THIRD PARTIES WERE RESPONSIBLE FOR THE USE CONTRARY TO THE INTENDED PURPOSE DO NOT AMOUNT TO A BREACH OF THE PRINCIPLE OF LEGAL CERTAINTY .

25 AS TO THE QUESTION OF PROPORTIONALITY THE TEST TO BE APPLIED IS WHETHER SUCH RULES EXCEED THE LIMITS OF WHAT IS NECESSARY AND APPROPRIATE TO ACHIEVE THE AIM IN VIEW .

26 THE CHARACTERISTICS OF THE PREMIUM GRANTED FOR THE DENATURING OF SUGAR MUST BE CONSIDERED IN THAT CONTEXT .

27 IT IS TRUE THAT THE PREMIUM IS PAID IN ORDER TO COVER THE COST OF THE DENATURING PROCESS , BUT IT IS CLEAR FROM THE COMMUNITY PROVISIONS IN QUESTION THAT IT IS PRIMARILY INTENDED TO ENABLE SUGAR TO BE DISPOSED OF FOR PURPOSES OF ANIMAL FEED . THE SECOND RECITAL IN THE PREAMBLE TO THE BASIC REGULATION , REGULATION NO 2049/69 , STATES MOREOVER THAT ' ' IT MIGHT BE DESIRABLE TO SPECIFY THAT THE DENATURED SUGAR SHOULD BE USED AS FEED FOR CERTAIN TYPES OF ANIMAL ' ' . IN ACCORDANCE WITH THAT PROVISION THE NATIONAL AUTHORITIES PROVIDED THAT SUGAR DENATURED IN THE FEDERAL REPUBLIC OF GERMANY MUST BE USED FOR FEEDING BEES . THE PREMIUM WAS THEREFORE TO BE PAID PRIMARILY TO ENABLE BEE-KEEPERS TO PURCHASE DENATURED SUGAR ON MORE FAVOURABLE TERMS .

28 IN THOSE CIRCUMSTANCES IT MUST BE CONCLUDED THAT WHERE THE DENATURED SUGAR HAS BEEN DIVERTED FROM THAT PURPOSE THE PAYMENT OF THE PREMIUM BECOMES POINTLESS AND THE PENALTY WHICH HAS BEEN LAID DOWN , NAMELY REPAYMENT OF THE DENATURING PREMIUM BY THE RECIPIENT WHERE THE SUGAR HAS NOT BEEN USED FOR THE PURPOSE WHICH THAT PREMIUM WAS INTENDED TO SERVE - THE FEEDING OF BEES - DOES NOT EXCEED WHAT IS APPROPRIATE AND NECESSARY IN ORDER TO ACHIEVE THE END IN VIEW .

29 THE REPLY TO THE SECOND PART OF THE QUESTION MUST THEREFORE BE THAT NATIONAL RULES WHICH PROVIDE THAT THE RECIPIENT OF A DENATURING PREMIUM CERTIFICATE IS LIABLE FOR ANY USE OTHERWISE THAN FOR THE INTENDED PURPOSE BY THIRD PARTIES DO NOT CONFLICT WITH COMMUNITY LAW .

COSTS
30 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE PROCEEDINGS BEFORE THE NATIONAL COURT , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT .

ON THOSE GROUNDS ,
THE COURT ( THIRD CHAMBER ),
IN ANSWER TO THE QUESTION REFERRED TO IT BY THE VERWALTUNGSGERICHT FRANKFURT AM MAIN BY ORDER DATED 26 FEBRUARY 1981 , HEREBY RULES :
RECIPIENTS OF DENATURING PREMIUM CERTIFICATES UNDER REGULATION NO 100/72 OF THE COMMISSION ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( I ), P . 21 ) ARE REQUIRED TO USE THE DENATURED SUGAR EXCLUSIVELY FOR ANIMAL FEED . THEY ARE LIABLE FOR ANY USE OTHERWISE THAN FOR THAT PURPOSE BY THIRD PARTIES .