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

JUDGMENT OF THE COURT (First Chamber)

21 March 2000 (1)

(Agriculture - Common organisation of the markets - Beef and veal - Export refund - Withdrawal of the application for advance payment - Effect on the security)

In Case C-217/98,

REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by the Bundesfinanzhof, Germany, for a preliminary ruling in the proceedings pending before that court between

Hauptzollamt Hamburg-Jonas

and

LFZ Nordfleisch AG

on the interpretation of the second paragraph of Article 33(1) of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ 1987 L 351, p. 1) as amended by Commission Regulation (EEC) No 1615/90 of 15 June 1990 (OJ 1990 L 152, p. 33) in conjunction with the first paragraph of Article 29 of Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products (OJ 1985 L 205, p. 5),

THE COURT (First Chamber),

composed of: L. Sevón (Rapporteur), President of the Chamber, P. Jann and M. Wathelet, Judges,

Advocate General: A. La Pergola,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

- LFZ Nordfleisch AG, by K. Landry, Rechtanswalt, Hamburg,

- the Commission of the European Communities, by K.-D. Borchardt and M. Niejahr, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of LFZ Nordfleisch AG and the Commission at the hearing on 9 September 1999,

after hearing the Opinion of the Advocate General at the sitting on 11 November 1999,

gives the following

Judgment

1. By order of 7 April 1998, received at the Court on 12 June 1998, the Bundesfinanzhof (Federal Finance Court) has referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) a question on the interpretation of the second paragraph of Article 33(1) of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ 1987 L 351, p. 1) as amended by Commission Regulation (EEC) No 1615/90 of 15 June 1990 (OJ 1990 L 152, p. 33) in conjunction with the first paragraph of Article 29 of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products (OJ 1985 L 205, p. 5).

2. That question was raised in proceedings between the Hauptzollamt Hamburg-Jonas (hereinafter 'the Hauptzollamt) and LFZ Nordfleisch AG, successor in title to Nordfleisch GmbH ('Nordfleisch), concerning the payment by Nordfleisch of theadditional amount of 20% provided for in the second paragraph of Article 33(1) of Regulation No 3665/87.

   The applicable legislation

3. Article 18(1) of Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organisation of the market in beef and veal (OJ, English Special Edition 1968(I), p. 187), as amended by Council Regulation (EEC) No 425/77 of 14 February 1977 (OJ 1977 L 61, p. 1), provides that, to the extent necessary to enable the beef and veal products to be exported on the basis of quotations or prices for those products on the world market, the difference between those quotations or prices and the prices within the Community may be covered by an export refund.

4. Article 15(1) of Regulation No 805/68 provides that exports from the Community may be made conditional on production of an export licence. The issue of such licences is conditional on the lodging of a deposit guaranteeing that importation or exportation is effected during the period of validity of the licence. That deposit is to be forfeited in whole or in part if the operation is not effected, or is only partially effected, within that period.

5. The general rules concerning the grant of export refunds on beef and veal and the criteria for fixing the amount of such refunds were laid down by Regulation (EEC) No 885/68 of the Council of 28 June 1968 (OJ, English Special Edition 1968(I), p. 237), as supplemented by Council Regulation (EEC) No 1504/76 of 21 June 1976 (OJ 1976 L 168, p. 7).

6. Article 5(2) and (3) of that regulation states that the amount of the refund is the amount applicable on the day of exportation but the refund may, upon request, be fixed in advance.

7. Article 5a of that regulation provides, in particular, that where the refund is fixed in advance, the granting of the refund is conditional on the presentation of a certificate of advance fixing issued by Member States. Article 5a(2) provides:

   'The issue of a certificate of advance fixing shall be conditional upon the provision of security guaranteeing that the exportation will be carried out within the period of the validity of the certificate. If the operation is not carried out, or only partially carried out, within that period, the security shall be wholly or partially forfeit.

8. The detailed rules for the application of Article 15 of Regulation No 805/68 and Article 5a of Regulation No 885/68 are laid down by Commission Regulation (EEC) No 3719/88 of 16 November 1988 laying down common detailed rules forthe application of the system of import and export licences and advance fixing certificates for agricultural products (OJ 1988 L 331, p. 1).

9. Article 39 of that regulation sets out the consequences of the rules for returned goods provided for by Council Regulation (EEC) No 754/76 of 25 March 1976 on the customs treatment applicable to goods returned to the customs territory of the Community (OJ 1976 L 89, p. 1), and Commission Regulation (EEC) No 2945/76 of 26 November 1976 laying down provisions for the implementation of Regulation No 754/76 (OJ 1976 L 335, p. 1). Article 43 of Regulation No 3719/88 in addition deals with the withdrawal of products from customs control and non-compliance with time-limits for warehousing or export.

10. Article 5(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), as amended by Council Regulation (EEC) No 2026/83 of 18 July 1983 (OJ 1983 L 199, p. 12), provides:

    'An amount equal to the export refund shall, at the request of the party concerned, be paid as soon as the products or goods have been brought under the customs warehousing or free zone procedure with a view to their being exported within a set time-limit.

11. Article 6 of the same regulation provides:

    'The benefit of the arrangements provided for in this regulation shall be subject to the lodgment of a security guaranteeing reimbursement of an amount equal to the amount paid, plus an additional amount.

    Without prejudice to cases of force majeure, this security shall be forfeited in whole or in part:

    - where reimbursement has not been made when export has not taken place within the period referred to in Articles 4(1) and 5(1), or

    - if there proves to be no right to the export refund, or if there was a right to a smaller refund.

12. Regulation No 3665/87 lays down detailed rules for the payment of export refunds on agricultural products.

13. Title 2, Chapter 3, of that regulation describes the rules for application of Regulation No 565/80 and the formalities to be carried out or the conditions to be complied with in order to be eligible for the advance refund in the case of processing or storage prior to export.

14. Article 25(1) and (2) of Regulation No 3665/87 provides that the exporter may state his intention to export the products or goods after processing or storage and to qualify for a refund by lodging a payment declaration with the customs authorities. That payment declaration must include all the particulars necessary for determining the refund.

15. Article 31(1) of Regulation No 3665/87 provides that, prior to acceptance of the payment declaration by the competent customs authority, a security must be lodged by the exporter equal to the amount calculated in accordance with Article 29(3), that is to say, the amount paid in advance plus 20%.

16. Article 26 of that regulation provides that at the time of acceptance of the payment declaration, the products or goods are to be placed under customs control until they leave the customs territory of the Community. It is the date of acceptance which determines the rate of refund.

17. Article 28(5) provides that the period during which the products or goods may remain under a customs warehousing procedure is to be six months from the date of acceptance of the payment declaration.

18. In accordance with Article 29(2), the advance payment of the refund is made only on written application by the exporter. Article 29(3) determines the method of calculating the amount payable in advance.

19. Article 30(1) states that the export declaration is to be lodged by the last day of the said period of six months at the latest. In accordance with Article 32(1), within 60 days of the date on which the products or goods are no longer subject to customs warehousing, they must leave the customs territory of the Community.

20. In the version appearing in Regulation No 1615/90, Article 33(1), which is also part of Title 2, Chapter 3 of Regulation No 3665/87, applicable to advance refunds in the case inter alia of storage prior to export, provides:

    'Where entitlement to a refund and/or monetary compensatory amount is proved in respect of products or goods permitted under the provisions of this chapter, the sum due shall be set off against the amount paid in advance. In cases where the amount due for the exported quantity is higher than that which has been paid in advance, the difference shall be paid to the person concerned.

    Where the amount due for the quantity exported is less than that paid in advance, in particular where paragraph 2 is applied, the competent authority shall initiate without delay the procedure laid down in Article 29 of Regulation (EEC) No 2220/85 with a view to payment by the operator of the difference between those two amounts, plus 20 %.

21. Article 29 of Regulation No 2220/85 sets out the detailed rules for the forfeiture in whole or in part of the security, where the person concerned does not pay the amount of the security forfeited within a maximum period of 30 days from the day of issue of demand for payment by the national authority. In accordance with that article:

    'Once the competent authority is aware of circumstances giving rise to forfeiture of the security, in whole or in part, it shall without delay demand that the party required to meet the obligation to pay the sum forfeited, allowing up to 30 days from the day of issue of demand for payment. Where payment has not been made at the end of this period, the competent authority shall:

    (a) without delay clear any security of the type described in Article 8(1)(a) to the appropriate account;

    (b) without delay require the guarantor described in Article 8(1)(b) to pay, allowing up to 30 days from the day of issue of demand for payment,

    (c) without delay take steps to

    (i) convert the securities described in Article 8(2)(a), (c), (d) and (e) into money sufficient to recover the sum due,

    (ii) clear pledged cash deposits to its own account.

    The competent authority may without delay clear any security of the type described in Article 8(1)(a) to the appropriate account without first requiring the person concerned to effect payment.

    The facts and the question referred

22. On 24, 25 and 27 July 1990, Nordfleisch applied for approximately 70 tonnes of beef to be placed in storage under customs rules with a view to advance payment of an export refund and lodged a payment declaration for the purposes of Article 25 of Regulation No 3665/87. The customs authorities accepted the applications, checked the quantity and nature of the goods, entered the quantities on the licences mentioned in those applications and fixed the applicable rate of the refund.

23. On 1 August 1990 Nordfleisch presented a request for advance payment of the export refund at the refund rate previously determined, in accordance with Article 29(2) of Regulation No 3665/87.

24. Between 2 and 6 August 1990, Nordfleisch withdrew its applications for payment of refunds, since it intended to re-import into the customs area of the Community the goods which had been placed in customs warehousing. For each of theapplications withdrawn, it requested and was granted an Information Sheet (INF 3) in accordance with Article 9(1) of Commission Regulation No 2945/76.

25. On 24 August 1990, despite the withdrawal of the applications for payment, the Hauptzollamt adopted four decisions for payment of the refund and paid Nordfleisch a total of DEM 237 150.02, corresponding to the export refund applicable to the goods placed in customs storage.

26. By decision of 6 November 1990, the Hauptzollamt demanded repayment of the sum corresponding to the refund paid in advance, together with the additional amount of 20%, that is, a total of DEM 47 370, in accordance with the second paragraph of Article 33(1) of Regulation No 3665/87.

27. The Hauptzollamt dismissed Nordfleisch's objection to the decision to levy the additional sum of 20%.

28. The action brought by Nordfleisch against that decision before the Finanzgericht Hamburg was successful, however. According to that court, it follows from the interpretation of the applicable provisions of Community law (Articles 5 and 6 of Regulation No 565/80, Articles 25, 29(2), 33(1) and 33 of Regulation No 3665/87) that the additional sum of 20% is not intended to ensure completion of the customs storage procedure with a view to an export refund paid in advance but rather to guarantee flat-rate compensation for the benefits received on account of the unjustified advantage gained from the advance payment of that refund. Altering the destination of the goods in question removes the obligation to lodge the security provided for by Article 31 of Regulation No 3665/87 precisely because advance payment of the export refund was no longer being claimed. The Finanzgericht considers that that must also be the case where, despite the withdrawal by the exporter of demands for payment, the customs authority pays the sum corresponding to the refund, a payment which was made by mistake and is therefore without any basis in law.

29. The Hauptzollamt appealed on a point of law against that judgment.

30. The Bundesfinanzhof considers first of all that it was a decisive factor that the goods were placed in customs warehousing with a view to obtaining an export refund and that, accordingly, the right to an advance payment exists, irrespective of the question of whether the right was actually exercised. Since Nordfleisch has not complied with the obligation to export the goods out of the Community customs territory within the prescribed period, the Hauptzollamt acted correctly in demanding that it pay the additional 20% by virtue of the second paragraph of Article 33(1) of Regulation No 3665/87.

31. The security lodged by the exporter is not intended solely to ensure the repayment of the amount paid in advance where appropriate and to offset at a flat rate anyunwarranted financial advantage derived from a claim for the payment of that sum, but is also intended to ensure the proper conduct of the procedure for refunds in the case of storage pending export and to deter the operators concerned from attempting improperly to benefit from that right. The Bundesfinanzhof points out in that connection that the additional sum of 20% would be disproportionate if it were merely intended to offset the financial advantage derived from unwarranted claims for advance payments. If such were the sole purpose of that additional sum, it would be sufficient if the rate calculated for that amount were merely a few points above the bank rate in force in the Member State concerned.

32. The Bundesfinanzhof considered, however, that all doubt could not be excluded as to the correctness of its view, and that it was necessary to refer the following question to the Court of Justice for a preliminary ruling in accordance with the third paragraph of Article 177 of the Treaty:

    'Is the second paragraph of Article 33(1) of Commission Regulation (EEC) No 3665/87 of 27 November 1997 in conjunction with the first paragraph of Article 29 of Commission Regulation (EEC) No 2220/85 of 22 July 1985 to be interpreted as meaning that the additional amount of 20% of the export refund concerned is to be levied even where the goods placed in customs warehousing with a view to advance payment of the refund pursuant to Article 5 of Council Regulation (EEC) No 565/80 of 4 March 1980 in conjunction with Articles 25 and 26 of Regulation (EEC) No 3665/87 are not exported - as originally planned - but are put back into free circulation in the Community directly following warehousing and the application for payment (Article 29(2) of Regulation (EEC) No 3665/87) is withdrawn?

33. Nordfleisch and the Commission, which have lodged observations before the Court, both maintain that the additional amount of 20% can only be levied where the advance payment has actually been requested, which is not the case in the main proceedings. The Commission notes, inter alia, that the obligation to lodge security before the payment declaration is accepted is explained by the fact that that acceptance gives rise to a right to the advance payment of the refund in favour of the exporter. However, the latter must also submit a written request for payment of that advance. The close connection existing between lodging the security and the advance payment is, moreover, clear from Regulation No 3665/87, the first indent of Article 31(3) of which provides that the security must be lodged in all cases before the advance payment is made. The Commission states that failure to comply with the obligation to export is already covered by other penalties, exhaustively governed by the combined provisions of Article 43(3) and 39(1)(b) and (c) of Regulation No 3719/88.

34. In this connection, it must be noted as a preliminary point that the various transactions described in Title 2, Chapter 3, of Regulation No 3665/87 constitute successive stages in the scheme applicable to the advance of the refund in cases of storage before export.

35. The trader must first submit a payment declaration which, once accepted by the competent customs authority, gives rise to entitlement to the advance payment of the export refund.

36. However, acceptance of the payment declaration does not authorise the customs administration to pay the trader that advance. That payment can be made only after the exporter has then submitted a request in writing to that end, the exporter thus having the opportunity to decide the date of the payment of the advance or, where the destination of the goods has been changed, to renounce that payment totally.

37. Furthermore, it is apparent from Article 6 of Regulation No 565/80 that the benefit of advance payments of the export refund is to be subject to the lodging of a security guaranteeing the reimbursement of an amount equal to the amount paid, plus an additional amount.

38. With regard to the rules applicable to the advance of the refund in the case of storage before export, the existence of a connection between the security and the advance payment is clearly mentioned in the wording of Article 31(3) of Regulation No 3665/87, according to which the Member State may allow the security to be lodged after the acceptance of the payment declaration provided that national provisions require the exporter to lodge the security in particular before the advance payment is made.

39. That security is intended to ensure that the sum advanced is repaid in full in the case of non-compliance with Community provisions relating to the advance payment system, and also to offset advantages obtained from unwarranted advance payment, which are calculated at a flat rate at the percentage fixed in Article 31(1) of Regulation No 3665/87.

40. In the absence of any Community provisions to the contrary, it is permissible for the exporter to withdraw its request for advance payment of the refund before the customs authority takes its decision on that request. In that case, the customs authority is not entitled to call in the security lodged by the exporter but must release it in its entirety.

41. If, notwithstanding the withdrawal of the application for payment, the national authorities none the less make advance payment of the amount of the refund, that payment taking place after the withdrawal has no bearing on the fate of the security.

42. The security cannot be kept in order to penalise non-compliance with the other obligations under the export refund system. Where the customs warehousing scheme has not been duly complied with or where the time-limits laid down by therules have not been observed, sanctions are laid down elsewhere, in particular pursuant to Articles 39 and 43 of Regulation No 3719/88.

43. The answer to be given to the question referred must therefore be that the second paragraph of Article 33(1) of Regulation No 3665/87, as amended by Regulation No 1615/90, in conjunction with the first paragraph of Article 29 of Regulation No 2220/85, is not applicable where an exporter, after submitting to the competent national authorities an application for advance payment of the export refund for goods placed under the customs warehousing scheme, in accordance with Article 29(2) of Regulation No 3665/87, withdraws his application in order to reintroduce those goods into the customs territory of the Community, but nevertheless receives the advance payment of the export refund originally applied for.

44. In those circumstances, the security provided for in Article 31(1) of Regulation No 3665/87 must be released and only the amount paid by way of advance payment of the export refund must be reimbursed by the exporter in accordance with the national provisions applicable to repayment of sums unduly paid.

    Costs

45. The costs incurred by the Commission, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (First Chamber),

in answer to the question referred to it by the Bundesfinanzhof by order of 7 April 1998, hereby rules:

The second paragraph of Article 33(1) of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products, as amended by Commission Regulation (EEC) No 1615/90 of 15 June 1990, in conjunction with the first paragraph of Article 29 of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application for the system of securities for agricultural products, is not applicable where an exporter, after submitting to the competent national authorities an application for advance payment of the export refund for goods placed under the customs warehousing scheme, in accordance with Article 29(2) of Regulation No 3665/87, withdraws his application in order to reintroduce those goods into the customs territory of theCommunity, but nevertheless receives the advance payment of the export refund originally applied for.

In those circumstances, the security provided for in Article 31(1) of Regulation No 3665/87 must be released and only the amount paid by way of advance payment of the export refund must be reimbursed by the exporter in accordance with the national provisions applicable to repayment of sums unduly paid.

SevónJann Wathelet

Delivered in open court in Luxembourg on 21 March 2000.

R. Grass L. Sevón

Registrar President of the First Chamber

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1: Language of the case: German.