Contents
In Case 23/79REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court], Munich, for a preliminary ruling in the action pending before that court between:GEFLÜGELSCHLACHTEREI FREYSTADT GMBH & CO. KG, FREYSTADT,andHAUPTZOLLAMT [Principal Customs Office] HAMBURG-JONAS,THE COURTcomposed of: H. Kutscher, President, J. Mertens de. Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco, A. Touffait and T. Koopmans, Judges,Advocate General: G. ReischlRegistrar: A. Van Houttegives the following
Judgment
Facts and Issues
The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
I —Facts and procedure
II —Written observations submitted to the Court
A —Observations submitted by the plaintiff in the main action
As to the facts of the case, the plaintiff in the main action states that it is not disputed that it sold and delivered goods at the world-market price to buyers established in a non-member country other than the German Democratic Republic and that it passed on the refunds and monetary compensatory amounts to the buyers in the form of a price reduction; the merchandise reached the German Democratic Republic without there having been any contractual relationship between the plaintiff and the second buyer.The plaintiff suggests that the first question referred to the Court for a preliminary ruling should be divided into two parts. The first subsidiary question is whether Article 9 of Regulation No 123/67, Articles 4 and 6 of Regulation No 176/67 and Articles 3, 4 and 8 of Regulation No 1041/67 are to be interpreted as meaning that where the refund rates have not been fixed at different levels depending on the destination of the exported products, proof must be submitted that the products have reached or been imported into a non-member country in addition to the proof that the products have left the geographical territory of the Community unaltered. The second subsidiary question is whether, if the reply to the first part is in the affirmative, the provisions should be interpreted as meaning that the goods must be put into free circulation in the country of destination, even if the refund rates are uniform.The plaintiff in the main action claims that the above-mentioned provisions should be interpreted as meaning that where the refund rates are not varied, it is sufficient to prove that the goods have left the geographical territory of the Community unaltered.It criticizes the conclusion drawn by the Bundesfinanzhof from the judgment delivered by the Court in Case 6/71 and claims that the concepts of exports used in Regulation No 123/67 and Regulation No 19/62 respectively are not the same and therefore the above-mentioned judgment of the Court concerning the concept of ‘exports to third countries’ as used in Regulation No 19/62 cannot be extended to the concept of ‘exports’ within the meaning of Article 9 of Regulation No 123/67. Case 6/71 did not deal with the concept of ‘exportation’ but the concept of ‘exports to third countries’ and the definition thereof in relation to the other concept, also used in Regulation No 19/62, of ‘exports to a Member State’. Those proceedings concerned the case where refund rates had been fixed which varied according to the differences in prices on the export markets in question; it was for this reason that the Court held that payment of the refunds for exports to non-member countries was subject to proof of importation into a non-member country. The decision in Case 125/75 was merely the logical extension of the principle established in Case 6/71.In the present case, however, the Court is not asked to define two concepts of export, on the one hand ‘exports to third countries’ and on the other ‘exports to a Member State’ and the refund rates are not varied according to the destination of the products in question. In the circumstances it would be more correct to define the concept of exports within the meaning of Article 9 of Regulation No 123/67 in the light of the provisions of Regulations No 176/67 and 1041/67.The content of Regulation No 176/67 is particularly important because this regulation was also issued by the Council because, according to its title, it lays down general rules for granting export refunds on poultry-meat and because its adoption was already envisaged in the fourth subparagraph of Article 9 (2) of Regulation No 123/67. Article 4 of Regulation No 176/67 provides that the refund may be varied according to the destination of the products exported. Where that is the case, the refund is to be paid only upon proof that the products have actually reached the destination for which the refund was fixed (first subparagraph of Article 6 (2). In every other case the refund is to be paid upon proof that the products have been exported from the Community (Article 6 (1)). Thus proof that the exported products have reached the destination for which the refund was fixed is required only in the case of non-uniform refunds.Provision for exceptions to the rule in the first subparagraph of Article 6 (2) is made in the second subparagraph: it was on the basis of this, together with Article 6 (3), that the Commission adopted Regulation No 1041/67, which must be interpreted strictly. According to the ninth recital in the preamble to Regulation No 1041/67 where the rate of the refund is varied according to the destination of the exported products, proof must be furnished that the product has reached the destination for which the refund was fixed. This solution corresponds to the first subparagraph of Article 6 (2) of Regulation No 176/67. Article 4 (1) of Regulation No 1041/67 states that in certain cases, in particular by reason of the nature of the export markets and thus wherever the rate of refund must be varied owing to the specific requirements of certain markets (Article 4 of Regulation No 176/67), Member States may require, as a condition for payment of the refund, proof not only that the product has left geographical territory of the Community, but also that the product in question has been imported into a non-member country. Moreover, Regulation No 1041/67 makes payment of the export refund likewise subject to proof only that the product has left the geographical territory of the Community unaltered (Article 3 (1) of Regulation No 1041/67).If the Court is unable to accept the principal argument put forward by the plaintiff in the main action, then the plaintiff argues that it has never been a condition that the goods should be put into free circulation in the country of destination. According to the plaintiff neither Regulations Nos 123/67 and 176/67 of the Council, nor Regulation No 1041/67 of the Commission, expressly require that they enter free circulation. Only in Article 4 (1) of Regulation No 1041/67 is the possibility mentioned of Member States' requiring ‘in certain cases’ proof that the product has been imported into a non-member country and proof of the conditions under which it was imported. Those regulations, especially Regulation No 1041/67, differ appreciably from subsequent regulations, in particular Regulation No 192/75, which replaced Regulation No 1041/67. Prior to the adoption of Regulation No 192/75 the relevant provisions of Community law did not require proof that the product had been put into free circulation in a non-member country, and certainly not where the refunds were the same for all non-member countries. The judgment delivered by the Court in Case 125/75 must be interpreted, on the basis of a contrario reasoning, to the effect that where the rate of refund is uniform, it is not necessary for the goods to have been put into free circulation in the country of destination.The plaintiff in the main action claims also that the objective of the refund has been achieved in the present case. It sold the goods in question at the world market price and the refunds and monetary compensatory amounts were passed on ipso facto to the buyers in the form of a price reduction. The meaning and purpose of the refunds and the monetary compensatory amounts, which are intended to reduce the price of Community products' to the level of world market prices in order to make it possible for them to be exported, has therefore been respected.As to the second question, the plaintiff in the main action claims that the facts that the goods in question were forwarded to the German Democratic Republic without having been put into free circulation in Austria and in Czechoslovakia does not damage its claim to the grant and payment of refunds and monetary compensatory amounts. Forwarding of this kind is possible in connexion with almost any exportation to non-member countries, but none of the relevant provisions raises any objection to the grant of a refund. In the present case the refunds were not fixed particularly with regard to the special conditions of the internal markets in certain non-member countries (the Austrian market in particular), nor were they designed to compensate for import duties in certain non-member countries (Austria in particular). According to the plaintiff the meaning and purpose of the refunds and the monetary compensatory amounts have been respected.The plaintiff in the main action claims that the Protocol on German Internal Trade and connected problems of 25 March 1957 precludes any other reply. According to the judgment delivered by the Court in Case 14/74 this Protocol must be interpreted strictly. In the plaintiffs opinion its claim to refunds and to monetary compensatory amounts can be refused only if it delivered the goods to the German Democratic Republic ‘under the Protocol as part of German internal trade’. That is not the case in the present instance since it sold and delivered the goods in question to a buyer established in a non-member country other than the German Democratic Republic; the transaction had nothing whatsoever to do with German internal trade.Moreover, the requirements to be met in order to enable it to claim the refunds and the monetary compensatory amounts were fulfilled by virtue of the fact that the goods were put into free circulation in the German Democratic Republic.Once the goods were exported from the territory of the Community as part of a commercial operation having no connexion with German internal trade within the meaning of the Protocol, their subsequent delivery to the German Democratic Republic must be viewed in the light of the same criteria as those applied to a consignment to another country.
B —Observations submitted by the Government of the Federal Republic of Germany
As to the first question referred to the Court for a preliminary ruling, the Government of the Federal Republic of Germany considers that the concept of ‘export’ within the meaning of Article 9 of Regulation No 123/67, Articles 4 and 6 of Regulation No 176/67 and Article 3 (1), Article 4 (1) and Article 8 of Regulation No 1041/67 presupposes in principle that the goods have been put into free circulation in the country of destination. None of the Community law provisions in question describes or defines in detail the concept of ‘export’ or the requirement ‘that the products have been exported outside the Community’. Only the ideas and objectives of the legislature, expressed in the relevant legal provisions, can help to decide the answer to the question whether the term ‘export’ as used in Community legislation on export refunds presupposes that the goods have been put into free circulation. The Federal Government recalls the purpose of the Community legislation on refunds as embodied in Article 9 of Regulation No 123/67 and the relevant recital in the preamble, according to which the difference between prices within the Community and prices on the world market is covered by a refund for the products referred to in Article 1 of the regulation in order to enable the products to be exported. Article 3 (2) of Regulation No 176/67 shows that the amount of the export refunds is obviously determined by the actual conditions obtaining on the market of non-member countries. The objective which the export refunds are designed to achieve can only be accomplished when the Community products become involved in economic exchanges in non-member countries. Where the products are not put into free circulation, consequently, there can be no entitlement to an export refund.The German Government considers that the observations made by the Court in Case 6/71 concerning Article 20 (2) of Regulation No 19 are also decisive for the interpretation of Article 9 of Regulation No 123/67 which has adopted the principal features of the former system of export refunds, in particular that in Article 8 of Regulation No 22 which resembles, in its turn, that in Article 20 (2) of Regulation No 19. Regulations Nos 176/67 and 1041/67 are based on Regulation No 123/67; in the implementing regulations the concept of export, as a condition for entitlement to a refund, must be understood in the light of the basic rules contained in the organizations of the market.Although the judgment which the Court delivered in Case 125/75 is not directly relevant to the present case, the Court clearly intimated in that judgment that, having regard to the aim of the export refund, the deciding factor for entitlement to a refund is that the goods have been put into free circulation in a country in relation to which provision for such entitlement has been made. If the export refund were to be awarded in this case solely on the grounds that the goods have been transported from the Federal Republic of Germany to Austria, without having been cleared through customs there, the objective of the refund would not have been achieved, because the goods in question would not have been placed on the Austrian market. Only in exceptional circumstances, such as the disappearance of the goods in question whilst in transit under customs control or the delivery of the goods to a free zone for release for consumption or processing in accordance with their use, will putting them into free circulation cease to be an absolute requirement for giving rise to entitlement to a refund.As to the second question referred to the Court for a preliminary ruling, the Government of the Federal Republic of Germany considers that the goods concerned in the present dispute cannot be held to have been exported from the Community and to be entitled to an export refund. Delivery such as that at issue must be considered as an integral part of German internal trade and is not affected by the EEC Treaty, as prescribed by paragraph 1 of the Protocol on German Internal Trade and connected problems of 25 March 1957. Consequently the substantive requirement of exportation has not been satisfied and the seller is therefore not entitled to an export refund.If the Court replies in the negative to the first question in the form in which it has been asked, the Federal Government declares that the Court should draw the attention of the Bundesfinanzhof to the fact that the movement of goods from the Federal Republic of Germany to the German Democratic Republic is, from the economic point of view, a commercial operation between the German territories governed by the Basic Law of the Federal Republic of Germany and the German territories in which the Basic Law does not apply, even when the delivery is carried out via a third country, in which the goods have not been put into free circulation. To grant an export refund would be inconsistent with the current conditions governing German internal trade and in the circumstances no export refund is payable.
C —Observations submitted by the Commission of the European Communities
The Commission points out that bearing in mind the facts of the present case the plaintiff in the main action will be entitled to the refund which it claims only if the Community provisions concerning refunds are applicable and the plaintiff satisfies all the requirements laid down in those provisions for acquiring entitlement to a refund.In this connexion the Commission notes that trade between the two parts of Germany is subject to special rules both by virtue of the law of the Federal Republic of Germany and by virtue of Community law. According to German law delivery of goods from one part of Germany to the other does not form part of external trade, but part of German internal trade between different zones, in relation to which special rules are to apply (Bundesverfassungsgericht [Federal Constitutional Court] 18, p. 353 at p. 354; 36, p. 1, at p. 17). From the point of view of Community law paragraph 1 of the Protocol on German Internal Trade and connected problems makes Community law inapplicable ab initio in this area which has been restricted to national law, whether Community law imposes charges or gives subsidies to international trade.Delivery of goods within the area subject to the reservation regarding German internal trade does not amount to exportation giving rise to entitlement to a refund. In order to resolve the original dispute, it is therefore necessary to decide whether the transactions involved in the dispute form part of German internal trade or not. There is some doubt as to whether this question can form the subject of a preliminary ruling under Article 177 of the EEC Treaty. On the one hand the Protocol reserves for the Federal Republic of Germany the right to decide what must be considered as German internal trade, whilst on the other both the Protocol and the Treaty are subject to interpretation by the Court which is thus empowered to decide what limits are imposed by the Community on the exercise of this national power of decision.However, a detailed examination of these questions is not necessary in the present case for Community law regarding refunds shows clearly that the plaintiff in the main action cannot have acquired the right to the refund claimed by it. As the Protocol precludes the granting of refunds for goods exported from one part of Germany to the other, the point of law to be considered, although this may not have been expressly mentioned in the various texts concerning refunds, is whether the refunds have been fixed for exports to non-member countries with the exception of the German Democratic Republic. This means that the situation is comparable to that which would arise if refunds for exports from the Federal Republic of Germany were varied according to the country of destination. Admittedly the provisions which have been adopted for granting non-uniform refunds (Article 8 of Regulation No 1041/67, now Article 11 of Regulation No 192/75) cannot be applied as they stand; however, the competent German authorities could refer to Article 4 of Regulation No 1041/67 (now Article 6 of Regulation No 192/75) in order to decide whether the rules in question have been observed.The Commission claims that poultrymeat is also subject to the general rule that when refunds are varied according to the country of destination, the refund payable is that fixed for the country of destination which the goods in question have reached within the meaning of the Community legislation on refunds (Regulation No 176/67, Article 6 (2)), that is to say the non-member country into which the goods have been imported for marketing. Anyone who claims the refund applicable for any particular country of destination must, as the Court has confirmed on several occasions in Cases 6/71 and 125/75, prove that the goods in question have arrived in that country, have been imported into it and placed on the market. If the poultry-meat at issue in the main action was imported, marketed and taken for consumption exclusively in the German Democratic Republic, that country is objectively the only country of destination which the goods have reached as far as the Community provisions governing refunds are concerned. As no refunds are payable for that country of destination the plaintiff in the main action cannot claim any refund in the circumstances.
III —Oral procedure
At the hearing on 11 July 1979 oral observations were submitted by the plaintiff in the main action, represented by Mr Landry of the Hamburg Bar, the Government of the Federal Republic of Germany, represented by Dr Seidel, Ministerialrat in the Federal Ministry for Economic Affairs, and the Commission of the European Communities, represented by its Legal Adviser, Mr Gilsdorf.The representative of the plaintiff in the main action dealt mainly in more detail with the arguments which he submitted in the course of the written proceedings, stressing the fact that in his opinion the first question relates solely to the concept of export without regard to any other conditions which might apply to a refund. In reply to a question asked by the Court he said that there was no systematic procedure for determining whether goods exported from the Federal Republic of Germany intended for a non-member country were in fact placed on the market in the German Democratic Republic.The representative of the Government of the Federal Republic of Germany, on the other hand, claimed that there is a systematic procedure for determining the actual destination of exported goods, mainly as a result of the fact that only one body, the Hauptzollamt Hamburg-Jonas, is empowered to grant export refunds and the competent authorities may, on the basis of reports drawn up by that office, carry out checks on the undertakings concerned, mainly on the basis of their commercial records. He added that the main features of the German system were adopted, at Community level, by Directive No 77/435 /EEC on 27 June 1977 on scrutiny by Member States of transactions forming part of the system of financing by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (Official Journal L 172 of 12 July 1977, p. 17). As to the substance of the case, the German Government's main point was that all the provisions of Community law referred to in the first question referred to the Court for a preliminary ruling concern only methods of payment (‘Zahlungsmodalitäten’) of the refunds, without clearly defining the concept of export on which the entitlement to a refund (‘materieller Erstattungsanspruch’) rests. It is therefore necessary to refer to the objectives of the rules in question.According to the Commission the Court need only reply to the second question referred to it for a preliminary ruling, for under the Protocol on German Internal Trade and connected problems the rules governing exports of agricultural products from the Federal Republic of Germany to the German Democratic Republic are to be considered as if refunds had been fixed only for non-member countries excepting the German Democratic Republic, so that the situation is the same as that where varying rates of refund are to be applied. In a subsidiary comment the Commission shares the view of the German Government that the provisions referred to in the first question concern only the detailed rules for paying refunds. In any event entitlement to a refund exists only if the goods in question have in fact reached the country of destination. If, where the rates are uniform, Community legal provisions are restricted in principle to requiring proof that the goods have left the geographical territory of the Community unaltered, this is dictated purely by practical considerations in order to facilitate trade; nevertheless, under Article 6 (3) of Regulation No 176/67 which was implemented mainly by Article 4 of Regulation No 1041/67, the exporter must always be prepared to have to prove more than the simple fact that the goods in question have left the geographical territory of the Community.The Advocate General delivered his opinion at the sitting on 13 September 1979.
Decision
Costs
Operative part
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