In Case C-199/90,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunale Civile di Roma for a preliminary ruling in the proceedings pending before that court between
Italtrade S.p.A.
and
Azienda di Stato per gli Interventi nel Mercato Agricolo (AIMA)
on the interpretation and validity of Article 8 of Commission Regulation (EEC) No 2373/83 of 22 August 1983 laying down, for the 1983/84 wine-growing year, detailed implementing rules concerning the distillation provided for in Article 11 of Regulation (EEC) No 337/79 (Official Journal L 232, p. 5), as amended by Commission Regulation (EEC) No 3501/83 of 12 December 1983 (Official Journal L 350, p. 5),
THE COURT (Sixth Chamber),
composed of: F.A. Schockweiler, President of the Chamber, P.J.G. Kapteyn, G.F. Mancini, C.N. Kakouris and M. Diéz de Velasco, Judges,
Advocate General: M. Darmon,
Registrar: H.A. Ruehl, Principal Administrator,
after considering the written observations submitted on behalf of:
- Italtrade SpA, by Fausto Capelli, of the Milan Bar, and Andrea Giardina, of the Rome Bar,
- the Italian Government, by Oscar Fiumara, Avvocato dello Stato, acting as Agent, and
- the Commission of the European Communities, by Eugenio de March and Patrick Hetsch, members of its Legal Service, acting as Agents,
having regard to the Report for the Hearing,
after hearing the oral observations of Italtrade SpA, the Italian Government and the Commission at the hearing on 20 June 1991,
after hearing the Opinion of the Advocate General at the sitting on 26 September 1991,
gives the following
Judgment
1 By order of 29 March 1990, which was received at the Court on 29 June, the Tribunale Civile di Roma referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation and validity of Article 8 of Commission Regulation (EEC) No 2373/83 of 22 August 1983 laying down, for the 1983/84 wine-growing year, detailed implementing rules concerning the distillation provided for in Article 11 of Regulation (EEC) No 337/79 (Official Journal L 232, p. 5), as amended by Commission Regulation (EEC) No 3501/83 of 12 December 1983 (Official Journal L 350, p. 5).
2 The questions arose in proceedings between Italtrade SpA and the Azienda di Stato per gli Interventi nel Mercato Agricolo (AIMA), the Italian intervention agency responsible for the implementation of the common agricultural policy, regarding the forfeiture of security furnished in respect of a preventive wine distillation operation.
3 Article 9(1) of Council Regulation (EEC) No 2179/83 of 25 July 1983 laying down general rules for distillation operations involving wine and the by-products of wine-making (Official Journal L 212, p. 1) permits the payment to the distiller or the producer undertaking distillation of an advance on the aid, subject to the provision of security. Article 9(2) provides that the security is to be released only if proof of distillation and of payment of the purchase price to the producer within the period laid down is submitted within a period to be determined.
4 Article 8(2) of Regulation No 2373/83 provided that for the purposes of the release of the security proof of distillation and of payment of the purchase price had to be submitted by 31 October 1984. If that time-limit was not met, but the proof was submitted before 1 February 1985, the amount to be released was 80% of the security, the balance being forfeit.
5 By Regulation No 3501/83 the dates of 31 December 1984 and 1 April 1985 were substituted for those of 31 October 1984 and 1 February 1985.
6 Italtrade submitted proof of payment of the purchase price to the producer shortly after 1 April 1985 and the AIMA retained the security furnished in respect of advances requested and granted.
7 Hearing an appeal against this decision of the AIMA the Tribunale Civile di Roma stayed the proceedings pending a ruling from the Court of Justice on the following three questions:
"(1) Must the time-limit laid down in Article 8 of Commission Regulation (EEC) No 2373/83, as extended by Regulation (EEC) No 3501/83, be interpreted as a mandatory time-limit, failure to observe which entails not a penalty but forfeiture of the beneficiary' s right to claim the aid for the distillation of wine?
(2) If Question 1 is answered in the negative, must those provisions be regarded as invalid inasmuch as the penalty prescribed (loss of the aid) infringes the principle of proportionality, either because it is excessive in relation to the (purely technical) infringement which has been committed or because it applies equally severely to infringements of differing gravity (failure to fulfil substantive obligations relating to distillation operations and mere delay in the presentation of proof relating to the completion of those operations)?
(3) Assuming that there is such lack of proportion, must invalidity be ruled out in any event in view of the fact that the provisions in question prescribe penalties of differing severity (loss of 20% or the entire amount of the aid) depending on the length of the delay (exceeding the time-limit of 31 December 1984 or that of 31 March 1985)?"
8 Reference is made to the Report for the Hearing for a more detailed account of the facts of the case, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
9 In the light of the contents of the order of the Italian court and the case pending before it, which relates to the lawfulness of the forfeiture of the security, the questions must be understood, in substance, as seeking to ascertain:
- whether the loss of the security mentioned in Article 8(2) of Regulation No 2373/83 constitutes a penalty, and if so
- whether the provision in question complies with the principle of proportionality, in view of the length of the delay in submitting proof and of the different penalties prescribed by Article 8(2) depending on the length of the delay.
10 With regard to the first question, it must be observed that it is well-established by decisions of the Court that the forfeiture of a security intended to ensure the performance of a certain obligation, which occurs if the trader has not submitted within the period allowed proof that the operation that what he has undertaken to effect has in fact been effected, must be regarded as a penalty (see in particular Maizena, Case 137/85 [1987] ECR 4587; Philipp Brothers, Case C-155/89 [1990] ECR I-3265).
11 The first question, as reformulated by the Court, must therefore be answered to the effect that the time-limits laid down in Article 8 of Regulation No 2373/83 and extended by Regulation No 3501/83 are mandatory time-limits failure to observe which entails automatically the penalty of forfeiture of the security in whole or in part according to the circumstances.
12 In order to answer the second question, as reformulated by the Court, it must be noted that in order to determine whether a provision of Community law is compatible with the principle of proportionality it must be determined whether the means adopted to achieve the objective pursued accord with the importance of that objective and whether they are necessary in order to achieve it (see, most recently, Philipp Brothers, above, and Lingenfelser, Case C-118/89 [1990] ECR I-2637).
13 With regard to the provisions at issue in this case, the purpose of fixing a mandatory time-limit for the submission of proof of distillation and of payment of the price to the producer is set out in the twentieth recital in the preamble to Regulation No 2179/83, which states that "to ensure that the system operates uniformly in all Member States, time-limits for the lodging of applications and for the payment of aid to distillers should be laid down". Consequently, the purpose of setting mandatory time-limits in Article 8(2) of Regulation No 2373/83 was to ensure good administrative management of the system of advances and observance of the principle of equal treatment among traders. In particular, it was necessary to prevent traders from obtaining an undue benefit by receiving advances which they would be unable to justify or which they would justify with excessive delay (Philipp Brothers, above).
14 In order to determine whether the loss of the security laid down in Article 8(2) of Regulation No 2373/83 accords with the importance of the objective thus described and whether it is necessary in order to achieve it, it must be observed that the penalty specified is not a fixed one, but depends on the length of the delay, and that the loss of the entire security occurs only if the distiller has not submitted the documentary proof by the expiry of a long period after the expiry of the initial time-limit, failure to observe which entails the loss of part of the security.
15 It must therefore be held that Article 8(2) of Regulation No 2373/83 instituted a system of penalties that was appropriate for the objective pursued and necessary for its achievement and that these provisions consequently comply with the principle of proportionality, the importance of which is, moreover, mentioned in the twentieth recital in the preamble to Regulation No 2179/83.
16 The answer to be given to the Italian court must therefore be that consideration of the second and third questions together has disclosed no factor capable of affecting the validity of Article 8(2) of Regulation No 2373/83.
Costs
17 The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, 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 (Sixth Chamber),
in answer to the questions referred to it by the Tribunale Civile di Roma by order of 29 March 1990, hereby rules:
1. The time-limits laid down in Article 8 of Commission Regulation (EEC) No 2373/83 of 22 August 1983 laying down, for the 1983/84 wine-growing year, detailed implementing rules concerning the distillation provided for in Article 11 of Regulation (EEC) No 337/79, and extended by Commission Regulation (EEC) No 3501/83 of 12 December 1983, are mandatory time-limits failure to observe which entails automatically the penalty of forfeiture of the security in whole or in part according to the circumstances;
2. Consideration of the second and third questions together has disclosed no factor capable of affecting the validity of Article 8(2) of Regulation No 2373/83.
