Gebrüder Knauf Westdeutsche Gipswerke v Hauptzollamt Hamburg-Jonas (118/79)

I —Facts and procedure

II —Written observations lodged with the Court by the Commission of the European Communities

The Commission considers that goods which leave the Community under outward processing arrangements and enter nonmember countries are strictly speaking “exported” just as much as goods for which customs clearance is obtained directly with a view to their final dispatch to nonmember countries.Assuming that the Council and the Commission had intended to exclude the case of exports under outward processing arrangements from the general obligation to pay the levy they would have made express provision therefor, as the Commission has furthermore done in Regulation No 645/75 for cases other than outward processing arrangements, in particular inward processing arrangements. The Commission emphasizes in this connexion that the inward processing arrangements, unlike outward processing arrangements, are subject to permanent customs supervision.That interpretation of the rules is confirmed by their spirit and objectives. In fact the charging of the levy is intended primarily to avoid disturbances on the markets in nonmember countries which are also caused by the importation of goods at a reduced price under outward processing arrangements and which result primarily from the large quantities of products thus absorbed by the processing industry of nonmember countries, in particular when that industry has lower production costs, which, according to the Commission, may be considered usual in outward processing arrangements, and accordingly offers an additional attraction for the undertakings concerned established in the Community. The Commission continues that such a practice may have an appreciable effect, at any rate temporarily, upon the processing of domestic products in nonmember countries.Furthermore, such disturbances might well be caused by the mere fact that cheap Community products are offered to the markets of nonmember countries at prices less than the cost price of the products of the latter countries. Undertakings which export their goods under outward processing arrangements are also suppliers to the markets of nonmember countries since they are not obliged to re-import the compensating products into the Community. The Commission adds that the very presence on the territory of a nonmember country of large quantities of goods which may be introduced at any time into the distribution network may have effects on the development of the market in that country.According to the seventh recital of the preamble to Regulation No 1132/74 export levies are also intended to reduce to an appropriate level the advantages, in the form of a production refund, granted to Community manufacturers. The Commission emphasizes in this connexion that the exporter, as a potential supplier on the market in the nonmember country, enjoys the great advantage of being able to opt on the basis of the development of the market either for keeping the goods on the market of the nonmember country or for their re-importation. Where the compensating product is re-imported there is a dual advantage with regard to competition: on the one hand in relation to foreign competitors since he can offer for sale a cheaper primary product and on the other in relation to national competitors since the processing costs in nonmember countries must be considered to be lower.The Commission adds that it is proper for the Community legislature to oppose such competitive advantages which arise through the cash benefits of the Community. This applies with even greater force since at the time when the events in question took place the Community had no influence on access to the outward processing arrangements since the system at that time was still exclusively under the control of the Member States.Finally, if the levy were not collected this would produce certain secondary effects: an incentive to make increased use of processing undertakings operating at a lower cost in nonmember countries and a reduction in supply in the Community accompanied by a tendency for prices to increase.The Commission recalls in this connexion that maize, as a basic product for the manufacture of maize starch, was not, during the period in question, widely available in the Community, as shown by the fact that during September and October 1974 it was necessary to charge export levies on maize in order to prevent stocks of maize in the Community from being diverted to the world market by reason of the level reached by the world prices.The Commission finally mentions the need to supervise the reimportation of compensating products in order to prevent the system of export levies as a whole from being rendered ineffective by resort to the outward processing arrangements. The absence of Community provisions providing for such supervision shows clearly that the authors of the regulation certainly intended that the exports effected under control processing arrangements should also be subject to the levy.The Commission considers that it is at least doubtful whether the Member States intended and were able to make good that lacuna by national provisions concerning subsequent collection.The Commission adds that on the basis of those considerations it has on other occasions too regarded it as a matter of great importance that on the exportation of goods under outward processing arrangements the charges to be levied at the frontier, such as compensatory amounts or “accession” compensatory amounts, should be collected in accordance with the general provisions. In this connexion it refers in particular to the fourth recital of the preamble to its Directive No 76/527/EEC of 4 June 1976 on the calculation of total or partial relief from import duties under the outward processing procedure (Official Journal 1976, L 153, p. 43). The reason why there is no mention of export levies in that provision is simply that in 1976 they no longer existed. The Commission states finally that there have been no Community provisions on the system of outward processing arrangements since 1976 (cf. Council Directive No 76/119/EEC of 18 December 1975 on the harmonization of provisions laid down by law, regulation or administrative action in respect of outward processing (Official Journal 1976, L 24, p. 58).The Commission accordingly suggests that the reply to be given to the preliminary question submitted by the Bundesfinanzhof should be in the affirmative.

IIIOral procedure

At the hearing on 24 January 1980 the plaintiff in the main action, represented by F. Kohler, Tax Adviser, and the Commission, represented by A. Stockburger, Advocate, acting as Agent, presented oral argument.The Advocate General, delivered his opinion at the sitting on 14 February 1980.