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

1 . Agriculture - Common organization of the markets - Discrimination between producers or consumers - Co-responsibility levy in the cereals sector - Exemption for cereals used on the producer' s farm after processing - Exemption subject to cereals being processed on the farm - Unlawful
( EEC Treaty, second subparagraph of Art . 40 ( 3 ); Commission Regulation No 2040/86, second subparagraph of Art . 1 ( 2 ), as amended by Regulation No 2572/86 )
2 . References for a preliminary ruling - Assessment of validity - Declaration that a regulation is invalid - Effects - Application by analogy of the second paragraph of Article 174 of the Treaty - Invalidity resulting from discrimination - Provisional maintenance in force of the contested scheme on the basis of non-discriminatory rules
( EEC Treaty, Art . 174 ( 2 ) and Art . 177 )

1 . The objective of the Community regulations governing the co-responsibility levy in the cereals sector, which is to limit the structural surpluses on the market, provides justification for imposing the levy only on the processing of cereals placed on the market, since quantities of cereals remaining in a closed circuit do not contribute to the creation of surpluses .
The second subparagraph of Article 1 ( 2 ) of Regulation No 2040/86, as amended by Regulation No 2572/86, is invalid in so far as it exempts from the co-responsibility levy the first-stage processing of cereals carried out on the producer' s own holding by means of the machinery of the farm, provided that the products of the processing are used on that holding, but does not provide for such exemption for first-stage processing carried out off the producer' s agricultural holding or by means of machinery which does not form part of the agricultural installations of the farm, where the products of the processing are used on that farm .
2 . Where the Court finds that a regulation is discriminatory, in so far as the rules for exemption from a levy for which it provides do not extend to certain categories of economic operators, a straightforward declaration that the contested provision was invalid would have the result that, pending the adoption of new provisions, all exemptions would be precluded . In such a case, the second paragraph of Article 174 of the EEC Treaty, under which the Court may state which of the effects of the regulation which it has declared void are to be considered definitive, must be applied by analogy for the same reasons of legal certainty as those which underlie that provision .

In Case 300/86
REFERENCE to the Court under Article 177 of the EEC Treaty by the Vredegerecht ( Cantonal Court ) for the judicial district of Brasschaat for a preliminary ruling in the proceedings pending before that court between
Luc Van Landschoot, Veurne, Belgium,
and
Mera NV, Veurne, Belgium,
and
Fédération européenne des fabricants d' aliments composés ( Fefac ), Brussels,
Beroepsvereniging van de Mengvoederfabrikanten ( Bemefa ), Brussels,
Fachverband der Futtermittelindustrie eV, Bonn,
Danske Korn - og Foderstof Im - og Eksportoerers Faellesorganisation ( Dakofo ), Copenhagen,
Syndicat national des industriels de l' alimentation animale ( SNIA ), Paris,
Irish Corn and Feed Association, Dublin,
Associazione nazionale tra i produttori de alimenti zootecnici ( Assalzoo ), Rome,
Koninklijke Vereniging Het Comité van Graanhandelaren, Rotterdam,
Vereniging van Nederlandse Mengvoederfabrikanten, The Hague,
Confederación Española de Fabricantes de Piensos Compuestos, Madrid,
Federation of Agricultural Coops, London,
United Kingdom Agricultural Supply Trades Association ( Ukasta ), London,
Syndicat national du commerce des grains et légumes secs ( Synagra ), Brussels,
interveners
on the validity of Commission Regulation No 2040/86 of 30 June 1986 laying down detailed rules for the application of the co-responsibility levy in the cereals sector ( Official Journal 1986, L 173, p . 65 ),
THE COURT ( Fifth Chamber )
composed of : G . Bosco, President of Chamber, U . Everling, Y . Galmot, R . Joliet and F . Schockweiler, Judges
Advocate General : M . Darmon
Registrar : D . Loutermann, Administrator
after considering the observations submitted on behalf of
Mera NV and the interveners, by I . Van Bael, J.-F . Bellis and J.-P . Spitzer,
the Italian Government, by I . Braguglia,
the Commission of the European Communities, by R . C . Fischer,
having regard to the Report for the Hearing and further to the hearing of 17 November 1987,
after hearing the Opinion of the Advocate General delivered at the sitting on 9 February 1988,
gives the following
Judgment

1 By a judgment of 26 November 1986, which was received at the Court on 1 December 1986, the Vredegerecht ( Cantonal Court ) for the judicial district of Brasschaat, Belgium, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question relating to the validity of the Commission' s rules for the application of the co-responsibility levy in the cereals sector .
2 The question was raised in proceedings between Luc Van Landschoot, a farmer, and Mera NV, a company manufacturing compound animal feed . Mera NV bought from Mr Van Landschoot 4 925 kg of corn for a total price of BFR 44 252 . It deducted from that price the sum of BFR 1 242 by way of co-responsibility levy in the cereals sector, pointing out that, as a first-stage processor of cereals, it was bound to pass on the levy to the cereal producer .
3 In his action brought before the Vredegerecht, Mr Van Landschoot seeks an order that Mera NV should pay to him the sum of BFR 1 242, corresponding to the amount of the co-responsibility levy retained, together with interest . In support of his claim, he states that the levy is contrary to the general principle of equal treatment, Article 40 ( 3 ) of the Treaty and the rules laid down by the Council in this field .
4 Considering that the judgment to be given depended on the question of the validity of the Commission' s rules governing the co-responsibility levy in the cereals sector, the Vredegerecht stayed the proceedings and referred the following question to the Court for a preliminary ruling :
"Is the co-responsibility levy for which the detailed rules of application are laid down by Regulation ( EEC ) No 2040/86 of 30 June 1986 valid?"
5 Reference is made to the Report for the Hearing for a fuller account of the facts of the case before the national court, the Community provisions in question, the course of the procedure and the observations submitted to the Court, which are mentioned or referred to hereinafter only in so far as is necessary for the reasoning of the Court .
The aim of the question
6 It is apparent from the documents before the Court that the objection raised before the national court to the co-responsibility levy system in the cereals sector essentially concerns the rules for exemption from the levy contained in the second subparagraph of Article 1 ( 2 ) of Commission Regulation No 2040/86 of 30 June 1986 laying down the detailed rules for the application of the co-responsibility levy in the cereals sector ( Official Journal 1986, L 173, p . 65 ), as amended by Commission Regulation No 2572/86 of 12 August 1986 ( Official Journal 1986, L 229, p . 25 ). The aforementioned provision essentially provides that first-stage processing carried out by a farmer on his own agricultural holding is to be exempt from the co-responsibility levy provided that the products of the processing are used for animal feed on the holding and the processing machinery forms part of the agricultural installations of the farm . It is therefore in the light of that provision that the question of validity raised must be examined .
7 Mera NV and the parties intervening in its support maintain that the rules in question are invalid . In this respect, they submit first of all that the exemption system is discriminatory . Regulation No 2040/86, as amended, exempts from the levy all farmers who process cereals into fodder for their cattle on their own holdings and, according to an interpretation given by the Commission, not only when they themselves produce cereals but also when they buy them from third parties . However, no examption is granted to industrial manufacturers of compound feed, even where such a manufacturer processes cereals supplied by a farmer who then uses the manufactured product on his own holding . Mera NV and the interveners further submit that the fact that only industrial processors are subject to the co-responsibility levy is not in accordance with the objective pursued by the relevant Council regulations, which is to restore equilibrium on the cereals market .
8 The Italian Government and the Commission, on the other hand, consider the regulations in question to be valid and deny that they are discriminatory . They argue first of all that a farmer who processes cereals on his own holding in order to use them for animal feed on that holding is in a different situation from both an industrial processor and a producer who sells cereals intended for processing . The fact that the first category is granted the exemption and not the other two categories does not therefore amount to discrimination as between producers or processors . Nor can there be said to be any discrimination between consumers, given that agricultural holdings which use cereals can always qualify for the exemption either by processing their own production or by processing cereals purchased from other farmers .
9 According to the second subparagraph of Article 40 ( 3 ) of the EEC Treaty, the common organization of the market must exclude any discrimination between producers or consumers in the Community . The Court has consistently held that this provision which is a specific expression of the general principle of equal treatment prohibits comparable situations from being treated differently, unless such difference of treatment is objectively justified . In the light of the observations made by the parties at the hearing, it must first be examined whether the second subparagraph of Article 1 ( 2 ) of Regulation No 2040/86, as amended, discriminates between processors of cereals .
The discrimination between processors of cereals
10 The aforementioned second subparagraph of Article 1 ( 2 ) exempts from the co-responsibility levy farmers who process cereals on their own farms by means of machinery belonging to their farms and who use the processed product on those farms . However, no such exemption is provided for in other cases, in particular in the case of industrial processors .
11 In this respect, it should be borne in mind that the objective of the Community regulations governing the co-responsibility levy is to limit the structural surpluses on the cereals market . This objective provides justification for imposing the levy only on the processing of cereals placed on the market, since it is only in such a case that market surpluses are increased, whilst quantities of cereals remaining in a closed circuit do not contribute to the creation of surpluses .
12 It follows that a different treatment of processors is justified according to whether the processed products are placed on the market or used on the processor' s holding . It is therefore in principle permissible to treat industrial processors and farmer-processors differently, since the former as a general rule carry on processing for the purpose of selling the product of processing on the market .
13 Such different treatment is not, however, justified where an industrial processor does not sell the processed products on the market but supplies them to the producer of the cereals on condition that the latter uses them on his own farm since, in such a case, the products in question do not contribute to the creation of market surpluses .
14 It therefore appears that the second subparagraph of Article 1 ( 2 ) of Regulation No 2040/86, as amended, discriminates between industrial processors in so far as they process cereals supplied by farmers intending to re-use the processed products and farmer-processors who process their own cereals production for use on their farms .
15 The same is true of producers who process their own cereals production, either outside their farms or by means of machinery not forming part of the farms' installations, when they use the processed product on those farms .
16 That conclusion cannot be controverted by the practical difficulties which would be involved in supervising processing carried out on agricultural holdings so as to ensure that the exemption from the levy was limited solely to producers processing cereals on their own farms using the machinery of their farms . That limitation is even more unjustified where it has the effect of placing at a disadvantage particularly small agricultural holdings whose resources are too limited to finance the acquisition of the machinery necessary for processing .
17 On the other hand, in order to establish the existence of discrimination as between processors, it cannot be argued, as the defendant in the main proceedings does, that, pursuant to an interpretation advocated by Commission officials in a telex message of 5 September 1986 addressed to the Member States, farmer-processors who purchase cereals from third parties in order to process them on their farms and use the processed product on them are also exempt from the levy . In fact, such an interpretation is not in accordance with the second subparagraph of Article 2 ( 1 ) of Regulation No 2040/86, as amended .
18 It is true that the German and English versions of the provision use the general terms "Landwirt" and "farmer" and thus give rise to doubt about whether the provision also applies to a farmer who does not himself produce cereals . All the other authentic language versions of the provision clearly show, however, that only the first-stage processing of cereals carried out by the cereal producer himself can be exempted from the levy . This interpretation is in conformity with the objective pursued by the regulations governing the co-responsibility levy, which is to limit surpluses of cereals entering the economic chain, and must therefore prevail . Thus interpreted, the provision is not therefore discriminatory in this respect .
Discrimination between cereal producers and cereal consumers
19 Pursuant to Article 4 ( 6 ) of Council Regulation No 2727/75 of 29 October 1975 on the common organization of the market in cereals, as amended by Council Regulation No 1579/86 of 23 May 1986 ( Official Journal L 139, p . 29 ), in conjunction with Articles 2 ( 1 ) and 5 ( 1 ) of Regulation No 2040/86, the levy payable by cereal processors is passed on by them to the producers .
20 It follows that discrimination as between cereal producers may be found to exist only if there is discrimination between cereal processors . Consequently, the allegation of discrimination as between producers is subsumed in that of discrimination as between processors and there is no need to examine it separately .
21 As regards the allegation of discrimination between consumers of cereals, it suffices to state that, as the levy is passed on, its burden is borne solely by the producers of cereals . Consumers cannot therefore allege that they are discriminated against owing to the rules governing exemption from the levy .
The scope of the preliminary ruling
22 It results from all the foregoing considerations that the second subparagraph of Article 1 ( 2 ) of Regulation No 2040/86 leads in part to discrimination between cereal processors and between cereal producers who operate in the way described above . That provision must therefore be declared invalid to that extent . It is for the Community legislature to act upon this judgment by adopting such measures as may be appropriate in order to establish equal treatment for operators as regards the contested exemption rules .
23 However, in the particular circumstances of the case, in which the discrimination does not arise from what the provision provides but from what it does not provide, a straightforward declaration that the contested provision was invalid would have the result that, pending the adoption of new provisions, all exemptions would be precluded .
24 In those circumstances, the second paragraph of Article 174 of the EEC Treaty, under which the Court may state which of the effects of the regulation which it has declared void are to be considered definitive, must be applied by analogy for the same reasons of legal certainty as those which underlie that provision . It should therefore be made clear that, pending the adoption of the new rules, the competent authorities must continue to apply the exemption provided for in the provision declared invalid but they must also grant it to the operators affected by the discrimination found to exist .
25 The reply to be given to the question raised should therefore be that :
"The second subparagraph of Article 1 ( 2 ) of Commission Regulation No 2040/86 of 30 June 1986, as amended by Commission Regulation No 2572/86 of 12 August 1986, is invalid in so far as it exempts from the co-responsibility levy the first-stage processing of cereals carried out on the producer' s own agricultural holding by means of the machinery of the farm, provided that the products of the processing are used on that holding, but does not provide for such exemption for first-stage processing carried out off the producer' s agricultural holding or by means of machinery which does not form part of the agricultural installations of the farm, where the products of the processing are used on that farm .
It is for the Community legislature to act upon this judgment by adopting such measures as may be appropriate in order to establish equal treatment for operators as regards the contested exemption rules .
In the mean time, the competent authorities must continue to apply the exemption laid down in the provision at issue but they must also grant it to operators affected by the discrimination found to exist ."

Costs
26 The costs incurred by the Italian Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court .

On those grounds
THE COURT ( Fifth Chamber ),
in answer to the question submitted to it by the Vredegerecht for the judicial district of Brasschaat, by a decision of 26 November 1986, hereby rules :
( 1 ) The second subparagraph of Article 1 ( 2 ) of Commission Regulation No 2040/86 of 30 June 1986, as amended by Commission Regulation No 2572/86 of 12 August 1986, is invalid in so far as it exempts from the co-responsibility levy the first-stage processing of cereals carried out on the producer' s own agricultural holding by means of the machinery of the farm, provided that the products of the processing are used on that holding, but does not provide for such exemption for first-stage processing carried out off the producer' s agricultural holding or by means of machinery which does not form part of the agricultural installations of the farm, where the products of the processing are used on that farm .
( 2 )It is for the Community legislature to act upon this judgment by adopting such measures as may be appropriate in order to establish equal treatment for operators as regards the contested exemption rules .
( 3 ) In the mean time, the competent authorities must continue to apply the exemption laid down in the provision at issue but they must also grant it to operators affected by the discrimination found to exist .