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Court of Justice of the European Communities (including Court of First Instance Decisions)
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Fabrica de Queijo Eru Portuguesa (Free movement of goods) [1997] EUECJ C-325/96 (16 December 1997)
URL: http://www.bailii.org/eu/cases/EUECJ/1997/C32596.html
Cite as:
[1997] EUECJ C-325/96
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IMPORTANT LEGAL NOTICE -
IMPORTANT LEGAL NOTICE - The source of this judgment is the web site of the Court of Justice of the European Communities. The information in this database has been provided free of charge and is subject to a Court of Justice of the European Communities disclaimer and a copyright notice. This electronic version is not authentic and is subject to amendment.
JUDGMENT OF THE COURT (Fourth Chamber)
16 December 1997(1)
(Inward processing relief arrangements - Special arrangements for milk sector
products - Extension of the time-limit for export)
In Case C-325/96,
REFERENCE to the Court under Article 177 of the EC Treaty by the Supremo
Tribunal Administrativo for a preliminary ruling in the proceedings pending before
that court between
Fábrica de Queijo Eru Portuguesa Ld.a
and
Subdirector-Geral das Alfândegas,
joined as a party: Ministério Público
on the interpretation of Article 14(2) of Council Regulation (EEC) No 1999/85 of
16 July 1985 on inward processing relief arrangements (OJ 1985 L 188, p. 1) and
Articles 27 and 28 of Council Regulation (EEC) No 3677/86 of 24 November 1986
laying down provisions for the implementation of Regulation No 1999/85 (OJ 1986
L 351, p. 1), as amended by Commission Regulation (EEC) No 2281/88 of 25 July
1988 (OJ 1988 L 200, p. 20),
THE COURT (Fourth Chamber),
composed of: H. Ragnemalm (Rapporteur), President of the Chamber,
P.J.G. Kapteyn and J.L. Murray, Judges,
Advocate General: D. Ruiz-Jarabo Colomer,
Registrar: H.A. Rühl, Principal Administrator,
after considering the written observations submitted on behalf of:
- Fábrica de Queijo Eru Portuguesa Ld.a, by Álvaro Caneira, of the Lisbon
Bar,
- the Portuguese Government, by Luís Fernandes, Director of the Legal
Service of the European Communities Directorate-General in the Ministry
of Foreign Affairs, and Luís Augusto Máximo dos Santos, Assistant in the
Lisbon Law Faculty, acting as Agents,
- the French Government, by Catherine de Salins, Head of Subdirectorate in
the Legal Affairs Directorate of the Ministry of Foreign Affairs, and
Frédéric Pascal, Central Administrative Attaché in the same Directorate,
acting as Agents,
- the Commission of the European Communities, by Francisco de Sousa
Fialho, of its Legal Service, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of the Portuguese Government and the
Commission at the hearing on 17 July 1997,
after hearing the Opinion of the Advocate General at the sitting on 17 September
1997,
gives the following
Judgment
- By order of 10 July 1996, received at the Court Registry on 4 October 1996, the
Supremo Tribunal Administrativo (Portuguese Supreme Administrative Court)
referred to the Court for a preliminary ruling under Article 177 of the EC Treaty
two questions on the interpretation of Article 14(2) of Council Regulation (EEC)
No 1999/85 of 16 July 1985 on inward processing relief arrangements (OJ 1985
L 188, p. 1, the 'basic regulation') and Articles 27 and 28 of Council Regulation
(EEC) No 3677/86 of 24 November 1986 laying down provisions for the
implementation of Regulation No 1999/85 (OJ 1986 L 351, p. 1), as amended by
Commission Regulation (EEC) No 2281/88 of 25 July 1988 (OJ 1988 L 200, p. 20).
- The questions were raised in proceedings between Fábrica de Queijo Eru
Portuguesa Ld.a ('Eru Portuguesa') and Alfândega de Lisboa ('the Customs
Authority') relating to an application for an extension of the time-limit for re-exporting goods which had been placed under inward processing relief
arrangements.
- It is clear from the first three recitals in the preamble to the basic regulation that
such arrangements are aimed at promoting exports from Community undertakings,
under the international division of labour, by enabling them to import goods from
non-member countries without paying import duties where they are to be exported
from the Community after processing, but without adversely affecting the essential
interests of Community producers.
- Article 14 of the basic regulation provides:
'1. The customs authority shall fix the time-limit within which the compensating
products must be dealt with in one of the [w]ays referred to in Article 18. This
time-limit shall be fixed having regard to the period necessary for completion of the
processing operations and for disposal of the compensating products.
2. The time-limits shall run from the date on which the non-Community goods are
placed under inward processing relief arrangements. The customs authority may
extend them on submission of a duly substantiated request by the holder of the
authorization.
...
3. ...
4. Specific time-limits may be established, in accordance with the procedure laid
down in Article 31(2) and (3), for certain processing operations or for certain
import goods.'
- Article 27 of Regulation No 3677/86 provides:
'Where the circumstances so warrant, the time-limit set for placement under one
of the procedures referred to in Article 18 or 27 of the basic regulation may be
extended, even when the limit originally set has expired.'
- Article 28 of Regulation No 3677/86 provides:
'In the case of agricultural products of the kind referred to in Article 1 of
Regulation (EEC) No 565/80, which are to be exported in the form of processed
products or goods within the meaning of Article 2(b) or (c) of that Regulation, the
period within which the import goods must be dealt with in one of the ways
specified in Article 18 of the basic regulation may not exceed six months.'
- The third recital in the preamble to Regulation No 2281/88 expressly states that 'in
view of the market situation for the milk products concerned the period of validity
of the inward processing authorization should be limited; ... a non-renewable
time-limit should also be set for dealing with the compensating products in one of
the approved ways'.
- In those circumstances, Regulation No 2281/88 added the following subparagraph
to Article 28 of Regulation No 3677/86:
'However, in [the] case of the products specified in Article 1 of Regulation (EEC)
No 804/68 intended for the manufacture of products referred to in that Article or
of goods listed in the Annex to that Regulation, the time-limit for re-export may
not exceed four months.'
- According to Article 1 of Council Regulation (EEC) No 565/80 of 4 March 1980
on the advance payment of export refunds in respect of agricultural products (OJ
1980 L 62, p. 5), that regulation applies to products covered by Regulation (EEC)
No 804/68 of the Council of 27 June 1968 on the common organization of the
market in milk and milk products (OJ, English Special Edition 1968 (I), p. 176).
Among those products, Article 1(c) and (d) of Regulation No 806/68 refer to
'butter' and 'cheese and curd'.
- It appears from the order for reference that during March 1988 Eru Portuguesa
imported from New Zealand 108 tonnes of butter under the inward processing
relief arrangements on the basis of an authorization of 11 March 1988 issued by the
Customs Authority. Under the terms of that authorization, the compensating
product to be exported was processed cheese, in the manufacture of which the
imported butter was to be used as the principal raw material.
- The time-limit for re-export, set by the authorization at six months, was twice
extended by the Customs Authority at the request of Eru Portuguesa on the ground
of force majeure; it was first extended until March 1989 and subsequently to 23 May
1989.
- On 21 June 1989 Eru Portuguesa applied to the Director General of Customs for
a further extension of the time-limit, pursuant to Article 27 of Regulation No
3677/86, in order for the remainder of the goods, which it specified as amounting
to some 30 tonnes, to be incorporated in the final product for export, or at least
for the company to be authorized under Article 18(4) of the basic regulation to re-export those goods 'in the unaltered state'.
- The Deputy Director General of Customs rejected that application by decision of
12 July 1989 on the ground, in particular, that Article 28 of Regulation No 3677/86,
as amended by Regulation No 2281/88, provides, in respect of the products
specified in Article 1 of Regulation No 804/68, that the time-limit for re-export may
not exceed four months. Noting that the provision was applicable from 26 July
1988, the Deputy Director General of Customs concluded that the two extensions
of the time-limit previously allowed to Eru Portuguesa had in fact been granted in
breach of Article 28 of Regulation No 3677/86.
- By judgment of 5 February 1991, the Tribunal Tributário de Segunda Instancia
(Fiscal Court of Second Instance) dismissed the action brought by Eru Portuguesa
for the annulment of that decision. That judgment was upheld by a judgment of 1
July 1992 of a Division of the Supremo Tribunal Administrativo. Eru Portuguesa
then lodged an appeal against that judgment with the Division for Fiscal Matters
of the Supremo Tribunal Administrativo, sitting in plenary session, which decided
to stay proceedings and seek a preliminary ruling from the Court of Justice on the
following questions:
'1. Should Article 28 of Council Regulation (EEC) No 3677/86 of 24 November
1986 be interpreted as meaning that the six-month time-limit prescribed
therein cannot be extended?
2. Or should that provision instead be interpreted as meaning that the general
rule for granting extensions provided for in Article 27 of that regulation and
in the second subparagraph of Article 14(2) of Council Regulation (EEC)
No 1999/85 of 16 July 1985 is to be applied to the said time-limit?'
- By its questions, which it is appropriate to examine together, the national court asks
essentially whether Article 28 of Regulation No 3677/86 must be interpreted as
meaning that the time-limits prescribed therein may not be extended or that they
may be extended pursuant to Article 27 of that regulation and Article 14(2) of the
basic regulation.
- Eru Portuguesa submits, first, that those time-limits, whether general or specific,
may be extended if such a course is justified in the particular circumstances of each
case. Secondly, it submits that by virtue of the principles of the protection of
legitimate expectations and legal certainty the Customs Authority was not, on any
interpretation, entitled to reject its application for an extension. Thirdly, it
maintains that the Customs Authority misused its powers. Lastly, it considers that
an extension of the time-limit should have been granted to it on the grounds of
force majeure, since it was impossible to re-export the compensating products or the
goods 'in the unaltered state'.
- The Portuguese and French Governments and the Commission contend that Article
28 of Regulation No 3677/86, in the version of that article resulting from
Regulation No 2281/88, lays down specific time-limits for the re-export of certain
goods, pursuant to Article 14(4) of the basic regulation, which national customs
authorities may not extend.
- The terms employed in Article 28 of Regulation No 3677/86, as amended by
Regulation No 2281/88, - 'the period ... may not exceed six months' and 'the
time-limit for re-export may not exceed four months' - clearly show that, for
agricultural products, the time-limits are specific and may not be extended. Such
time-limits were established in accordance with Article 14(4) of the basic regulation
and are applicable by way of derogation from Article 27 of Regulation No 3677/86.
- Such an interpretation of Article 28 of Regulation No 3677/86 is, moreover,
consistent with the objective pursued by that regulation and the basic regulation,
which is to make application of the inward processing relief arrangements to
agricultural products more difficult because of the particular problems raised by the
functioning of the common market in those products. It was for that reason that it
was decided to set strict bounds at Community level to the time-limits within which
the inward processing relief arrangements for import goods are to be cleared.
- It follows that that objective would be undermined if the specific time-limits
referred to in Article 28 of Regulation No 3677/86 could be extended by the
national customs authorities.
- As regards the principles of the protection of legitimate expectations and legal
certainty, it should be stated that as from 1 January 1987, the date on which the
basic regulation took effect and Regulation No 3677/86 entered into force, the
time-limit of six months generally applicable to agricultural products could not be
extended and as from 26 July 1988, the date on which Regulation No 2281/88
entered into force, nor could the time-limit of four months applicable to milk
products. Consequently, the two extensions of the time-limit for re-export allowed
to Eru Portuguesa in 1988 and 1989 were wrongly granted.
- That being so, it need merely be held that a trader is not entitled to expect that,
when he has benefited from decisions of a national authority that do not comply
with a clear and unequivocal rule of Community law, the same authority will adopt
a further decision in breach of Community law.
- The argument based on misuse of powers is also irrelevant, inasmuch as, by
refusing to grant a further extension to the time-limit for re-export, the Customs
Authority did no more than apply Article 28 of Regulation No 3677/86 correctly
and did not use its powers for the exclusive, or at least predominant, purpose of
achieving ends other than those provided for by the applicable Community rules.
- Lastly, with regard to the principle of force majeure relied upon by Eru Portuguesa
to justify its claim that it was impossible to re-export the compensating products or
the goods 'in the unaltered state', it should be noted that no mention was made
of the existence of abnormal and unforeseeable circumstances extraneous to the
trader concerned, the consequences of which could only have been avoided at the
cost of excessive sacrifice, despite all the efforts deployed.
- The answer to the questions referred to the Court is therefore that Article 28 of
Regulation No 3677/86, as amended by Regulation No 2281/88, must be interpreted
as meaning that the time-limits for re-export laid down therein may not be
extended.
Costs
- The costs incurred by the Portuguese and French Governments and by the
Commission of the European Communities, which have 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 (Fourth Chamber),
in answer to the questions referred to it by the Supremo Tribunal Administrativo
by order of 10 July 1996, hereby rules:
Article 28 of Council Regulation (EEC) No 3677/86 of 24 November 1986 laying
down provisions for the implementation of Regulation (EEC) No 1999/85 on
inward processing relief arrangements, as amended by Commission Regulation
(EEC) No 2281/88 of 25 July 1988, must be interpreted as meaning that the time-limits for re-export laid down therein may not be extended.
Delivered in open court in Luxembourg on 16 December 1997.
R. Grass
H. Ragnemalm
Registrar
President of the Fourth Chamber
1: Language of the case: Portuguese.